AB Dynamics (ABDP) has been taking full advantage of record spending on automotive research and development (R&D). Global expansion, manufacturing efficiencies and the introduction of higher-margin products saw operating profit at the testing and measurement specialist for vehicle suspension, brakes and steering jump by a third to £1.5m.
Gross margins were lifted by last year's launch of a new robot-assembly line as well as the roll-out of popular track-testing products. Management say a lot of demand stems from Euro NCAP standards, a five-star rating system on vehicle safety that has become a platform for competition between car brands.
AB supplies six of the top 20 biggest R&D spenders globally. Management doesn't expect the likes of Volkswagen, Toyota, Ford and Honda to slacken the pace of their spending, as regulation on emissions continues to tighten and competition remains intense.
To cater to surging demand, AB opened a new office in Japan. But the biggest source of excitement is a soon-to-be-built UK facility. This will cost roughly £6.5m, but managing director Tim Rogers says it will significantly boost efficiency by bringing the entire company under one roof.
Prior to these results, broker Charles Stanley expected pre-tax profit of £2.8m for the full year, giving EPS of 12.2p (from £2.7m and 12.1p in 2014).
| AB DYNAMICS (ABDP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 201p | MARKET VALUE: | £34m | |
| TOUCH: | 197-205p | 12-MONTH HIGH: | 201p | LOW: 147p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 68p | NET CASH: | £7.0m | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 6.7 | 1.2 | 5.3 | 1.0 |
| 2015 | 7.6 | 1.5 | 7.5 | 1.1 |
| % change | +13 | +29 | +41 | +10 |
Ex-div: 7 May Payment: 22 May | ||||
