Brammer 's (BRAM) directors could be forgiven for assuming the brace position each time they are forced to speak to the market. Following sell-offs provoked by trading updates last May and November, and another drop in the stock following half-year results, shares in the industrial supplier this time cratered 17 per cent on another weak earnings report.
The distributor of engineering components sees significant consolidation opportunities across a fragmented European market, but it currently has a sales problem. In 2015, the two trouble areas were the UK and Nordic regions, which account for just under half of revenue and saw a decline in sales in constant-currency terms due to deteriorating activity in the aerospace, steel and energy sectors. Weakness in the euro and operational issues with the integration of Buck & Hickman only added to the misery.
The mitigation strategy now centres on a £30m reduction in inventory by September, which should improve stock turn and help reduce a debt pile that came in £8m above Peel Hunt's forecasts. Following these results, the broker now expects full-year adjusted pre-tax profit of £27.5m, giving diluted EPS of 15.4p, against £27.6m and 14.8p in 2015.
BRAMMER (BRAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 180.3p | MARKET VALUE: | £233m | |
| TOUCH: | 180.3-180.5p | 12-MONTH HIGH: | 421p | LOW: 137p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 115p* | NET DEBT: | 70% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 572 | 24.5 | 16.8 | 8.4 |
| 2012 | 640 | 26.2 | 16.6 | 9.4 |
| 2013 | 652 | 32.9 | 20.5 | 10.2 |
| 2014 | 724 | 17.7 | 9.2 | 10.7 |
| 2015 | 717 | 13.5 | 7.3 | 10.7 |
| % change | -1 | -24 | -21 | - |
Ex-div: 9 Jun Payment: 8 Jul *Includes intangible assets of £149.7m, or 116p a share | ||||
