"It's been a pretty tough year frankly," admits Rex Orton, finance director at safety harness specialist Latchways (LTC). A spending hiatus at a big Australian utility customer, delays to wind farm projects in the North Sea and Europe, and falling construction revenues caused two profit warnings. A big order from Airbus the previous year only made comparisons harder, and underlying pre-tax profit slumped by a third to £6.8m.
Crucially, however, there are signs that business is picking up. "These are delays rather than business having gone away," says Mr Orton. Order intake this financial year is currently matching last year. House broker N+1 Singer certainly expects a bounce back this year, forecasting profit of £8.6m and adjusted EPS of 62.9p (from 50.6p in 2014).
A wind farm contract off the coast of Germany suggests projects delayed by tariff uncertainty are back on, and Latchways' Wingrip system for workers on aircraft wings "has the strongest pipeline in years". Later-cycle work in commercial construction should start to come back, too, and work is picking up in North America, where revenue grew by 60 per cent to £6.8m. However, using US distributor 3M has hurt margins, and ramping up its own team both there and in South America increased costs.
LATCHWAYS (LTC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,135p | MARKET VALUE: | £127m | |
| TOUCH: | 1,125-1,145p | 12-MONTH HIGH: | 1,413p | LOW: 1,010p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 22 | |
| NET ASSET VALUE | 309p* | NET CASH: | £10.3m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 33.9 | 7.6 | 49.3 | 25.8 |
| 2011 | 39.6 | 9.3 | 61.3 | 29.6 |
| 2012 | 41.4 | 9.9 | 66.0 | 32.7 |
| 2013 | 42.4 | 10.9 | 74.5 | 36 |
| 2014 | 38.5 | 6.8 | 50.7 | 39.6 |
| % change | -9 | -38 | -32 | +10 |
Ex-div: 13 Aug Payment:12 Sep *Includes intangible assets of £6.5m, or 58p a share | ||||
