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Stobart ready for lift-off

The logistics company looks healthier after a protracted restructuring phase
October 23, 2014

Stobart's (STOB) half-year results show a company rebuilding for the future, with operating profit dragged down by the notable absence of Eddie Stobart. The logistics company offloaded half its stake in the famous haulier for £281m in March, and has spent the months since clearing £191m of debt while focusing its attentions on its faster-growing air and biomass businesses.

IC TIP: Buy at 100p

In a year of tidying up, £8.1m was spent on early debt repayment charges - hence the pre-tax losses -while the profitability of the biomass transport business was impacted by the end of a £2.5m annual contract. On a more positive note, the biomass supply business is roaring ahead, with volumes up 56 per cent to 482,000 tonnes. Chief executive Andrew Tinkler reckons it is on track to achieve its target of supplying 2m tonnes a year by 2018, thanks to new long-term contracts.

He is also excited by the growth potential of Stobart's aviation segment, primarily at Southend Airport, which reported 19 per cent growth in passenger numbers. Flybe (FLYB) now flies to six destinations from the Essex base, and management is confident that passenger numbers will jump from 1.1m to about 3m a year as demand from London soars and more airlines, lured by lower fees, follow Flybe's lead.

Broker Oriel Securities expects adjusted pre-tax profit of £11m for the current financial year and £17m for 2015-16, giving adjusted EPS of 2.7p and 5.1p, respectively.

STOBART (STOB)
ORD PRICE:100pMARKET VALUE:£328m
TOUCH:99-101p12-MONTH HIGH:155pLOW: 93p
DIVIDEND YIELD:6.0%PE RATIO:86
NET ASSET VALUE:126p*NET DEBT:2%

Half-year to 31 AugustTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201348.11.2-0.132.0
201456.2-8.6-2.262.0
% change+17---

Ex-div: 6 Nov

Payment: 5 Dec

*Includes intangible assets of £118m, or 36p a share