Matching last year's strong first half was always going to be a struggle for packaging materials company, API Group (API). The blame for a 26 per cent slump in underlying operating profit, to £3.5m, was split evenly between lower sales and higher costs. Still, profit was up 10 per cent on the second half of last year and full-year results should improve. There's a first dividend since 2001, too.
Clearly, the dividend will placate API's two major shareholders - Steel Partners and Wynnefield Capital - who tried unsuccessfully to sell the business earlier this year. But operational improvements are expected, too, and broker Numis Securities still anticipates full-year adjusted pre-tax profit of £7.1m, giving adjusted EPS of 9.2p (from £6.8m and 8.7p in 2013).
Profit fell by a fifth at API's core laminates division, to £3.3m, after it lost volume following packaging changes and following reduced allocation from a big UK drinks firm. Still, a new high-spec laminates contract has finally hit targets and should underpin volumes there. Ironing out manufacturing inefficiencies over the next six months should help, too. Elsewhere, restructuring at the European foils division will save £0.3m a year and, despite associated disruption, first-half profit soared 27 per cent to £0.9m. A new system affected supply at the American foils operation, too, yet profit still edged up to £1.1m. Losing a long-standing contract tipped the holographics division into the red, although cost-cutting should mean it breaks even by the fourth quarter.
API (API) | ||||
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ORD PRICE: | 79p | MARKET VALUE: | £60.6m | |
TOUCH: | 77-81p | 12-MONTH HIGH: | 93p | Low: 50p |
DIVIDEND YIELD: | 0.9% | PE RATIO: | 13 | |
NET ASSET VALUE: | 32p* | NET DEBT: | 22% |
Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2012 | 58.8 | 3.60 | 4.9 | nil |
2013 | 56.9 | 2.59 | 3.5 | 0.7 |
% change | -3 | -28 | -29 | - |
*Includes intangible assets of £5.2m, or 7p a share Ex Div: 11 Dec Payment: 9 Jan |