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e2v profits from image change

e2v's drive to simplify life for its customers is yielding decent results
May 19, 2015

An improvement plan centred on listening to customers, innovation, simplification and maximising efficiency seems to be paying off at e2v (E2V). Despite challenging end markets, these measures and cost reductions helped the manufacturer of radio frequency and microwave components grow its adjusted operating profit by 16 per cent to £40.1m for the year to March.

IC TIP: Buy at 235p

The operational changes fuelled a surge in demand for e2v's niche range of electronic products. Spanish imaging sensors business AnaFocus - acquired last year to capitalise on rising demand for high-end surveillance - proved a key driver of revenue growth. And the group also reported rising demand for its cancer-cell destroying radiotherapy machines, as well as space and professional imaging products. Overall, the 12-month order book swelled 14 per cent to £146m.

To capitalise on buoyant appetite in these markets, management upped research spending to £14.8m, nearly 7 per cent of revenue. They also unveiled plans to continue expanding operations in Asia and the US. These investments and further acquisitions are expected to help e2v achieve its goal of doubling operating profit by 2020.

Broker Investec Securities expects adjusted pre-tax profit of £41.8m in fiscal 2016, giving adjusted EPS of 14p.

E2V TECHNOLOGIES (E2V)
ORD PRICE:235pMARKET VALUE:£514m
TOUCH:234-235p12-MONTH HIGH:244pLOW: 146p
DIVIDEND YIELD:2.2%PE RATIO:21
NET ASSET VALUE:78p*NET DEBT:3%

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201122925.89.13.6
201223532.011.14.1
201320034.212.54.1
201421833.111.64.4
201522530.110.95.1
% change+3-9-6+16

Ex-div: 9 Jul

Payment: 4 Aug

*Includes intangible assets of £99m, or 45p a share