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Laird's diversification drive pays off

Shares in Laird climbed 3 per cent after the wireless connectivity specialist diversified its business and ventured into high-growth sectors.
March 2, 2016

Diversification is paying off for Laird (LRD), the wireless connectivity specialist that, not too long ago, was considered unreliable for its overreliance on the smartphone and tablet markets. "I'm less concerned about any particular customer than I've ever been before," says chief David Lockwood when questioned about the impact a lack of new product launches from Apple (US:AAPL) had on the business. Adjusted operating profit growth of 13 per cent to £81m confirms that weakness in its once core markets is no longer a major hindrance.

IC TIP: Buy at 346p

Against a backdrop of weak telecoms and smartphone markets, the performance materials segment delivered revenue growth of 8 per cent. That success was mainly achieved by impressing customers with bespoke solutions under tight timeframes, the Vietnam facility running at full capacity and the introduction of a number of popular connected transport products.

The 'internet of things' phenomenon also played a key role in driving a 19 per cent rise in wireless system sales, as the group bagged significant automotive wins in Europe, China and the Americas. The acquisitions of LSR and Novero are expected to further bolster market share in machine-to-machine technology.

Broker JPMorgan Cazenove forecasts adjusted pre-tax profit of £88.4m in 2016, giving EPS of 26.9p, up from £73m and 21.8p last year.

LAIRD (LRD)
ORD PRICE:346pMARKET VALUE:£939m
TOUCH:345.7-346.8p12-MONTH HIGH:413pLOW: 315p
DIVIDEND YIELD:3.8%PE RATIO:na
NET ASSET VALUE:151p*NET DEBT:48%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201149129.3-44.88.0
201252045.112.710.0
201353743.211.512.0
201456548.118.812.5
201563015.4-3.113.0
% change+12-68-116+4

Ex-div: 2 Jun

Payment 6 Jul

*Includes intangible assets of £613m, or 226p a share