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Molins looks to a better second half

RESULTS: Profits at Molins are heavily weighted towards the second half, but that may still not compensate for the first-half's weak performance
August 29, 2014

Adding back reorganisation and pension-related charges still left specialist technology group Molins (MLIN) with a 60 per cent drop in underlying pre-tax profit to £600,000 at the half-year stage.

IC TIP: Hold at 136p

Most of this reflected a sales slump at the tobacco machinery division, the biggest contributor to group profits. Sales here slid from £18m to £10m on reduced order demand and the deferral of two large orders to the Middle East and Eastern Europe. But new initiatives, such as the launch of a new cigarette packing machine, should have a positive impact over the medium-term.

The scientific services unit, however, saw sales rise 3 per cent to £11.7m. A new instrument for testing e-cigarettes has been launched and strong interest has already resulted in initial sales. Orders grew for laboratory-based analytical services, too, although overall sales fell because last year’s outcome was boosted by a large one-off sale.

The packaging division's sales grew 9 per cent - but actually fell marginally to £18.3m after accounting for the strength of sterling - while operating profit here was flat at £100,000. Plans are in place to widen the division’s customer base, notably in the pharmaceutical and healthcare sectors.

Broker Panmure Gordon has downgraded its full-year forecasts by 10 per cent to pre-tax profit of £5.1m, giving EPS of 18.6p (from £5.4m and 22.6p in 2013).

MOLINS (MLIN)
ORD PRICE:136pMARKET VALUE:£27.5m
TOUCH:134-138p12-MONTH HIGH:195pLOW: 134p
DIVIDEND YIELD:4.0%PE RATIO:10
NET ASSET VALUE:175p*NET DEBT:3%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201347.80.73.52.5
201440.0-0.1-0.92.5
% change-16---

Ex-div: 17 Sep

Payment: 9 Oct

*Includes intangible assets of £15.7m, or 78p a share