After limping through much of 2013, there are signs that the eurozone economy may return to growth this year. Brammer (BRAM) will certainly hope so. An anticipated pick up in the region came much later than expected, forcing the company, which distributes industrial parts to factories across the region, to warn on profits last November. Things have improved since then, but the City needs more convincing.
Strip out the previous year's hefty restructuring costs and operating profit grew 7 per cent to £39.8m. But that was all down to the UK, where an 80 basis point increase in margins pushed profit up 16 per cent to £21m. Crucially, Brammer has successfully retendered its big contract with Rolls-Royce. In Germany, Brammer's second most important market, profit tumbled 7 per cent to £6.5m, although top-line growth returned in the fourth quarter. In fact, sales improved everywhere during the second half except France, and even there was some "marginal improvement" in the final quarter.
Recent data has confirmed that the eurozone grew faster than expected in the last three months of 2013, led by Germany and France. And chief executive Ian Fraser says the positive trend for Brammer has continued into the first six weeks of 2014. Broker Investec Securities expects adjusted pre-tax profit of £42.2m in 2014, giving adjusted EPS of 25.8p (from 21.4p in 2013).
BRAMMER (BRAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 449p | MARKET VALUE: | £530m | |
| TOUCH: | 445-449p | 12-MONTH HIGH: | 500p | LOW: 315p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 22 | |
| NET ASSET VALUE | 109p* | NET DEBT: | 42% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 426 | -1.5 | 0.1 | 5.5 |
| 2010 | 468 | 19.3 | 13.0 | 6.6 |
| 2011 | 572 | 24.5 | 16.8 | 8.4 |
| 2012 | 640 | 26.2 | 16.6 | 9.4 |
| 2013 | 652 | 32.9 | 20.5 | 10.2 |
| % change | +2 | +26 | +23 | +9 |
Ex-div: 4 Jun Payment: 3 Jul *Includes intangible assets of £113.5m, or 96p a share | ||||
