"We're not delighted with these results," says Jonathan Straight, founder and chief executive of wheelie bins and kerbside boxes maker Straight, confirming a slip into the red and loss of the dividend after the company got caught out by higher polymer prices earlier this year. This depressed margins on some big contracts and, with competition tough, sales growth disappointed, too.
Underlying operating profit plunged from £1m to just £0.13m, driven by a 70 per cent fall in profits at the core trade division, which was only partially offset by a £200,000 contribution from retail. Still, workers are "flat out" delivering improvements, increasing hopes of a better second half. Indeed, huge inefficiencies at the factory in Hull are being corrected. Temporary staff have been let go - one-third of the shop floor - and the old management are next. Straight also relies less now on local authority contracts - these account for 68 per cent of trade sales compared with 90 per cent in the past. And exports are increasing, up 29 per cent, although a new distributor will hope to plug a decline in US sales.
Broker Cenkos has downgraded full-year adjusted pre-tax profit forecasts from £0.7m to £0.4m, giving adjusted EPS of 2.9p (£1.9m and 11.9p for 2010).
STRAIGHT (STT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 59.5p | MARKET VALUE: | £6.8m | |
| TOUCH: | 57-62p | 12-MONTH HIGH: | 118p | Low: 59.5p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 86p* | NET DEBT: | 37% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 13.2 | 0.85 | 5.30 | 1.35 |
| 2011 | 15.0 | -0.11 | -1.00 | NIL |
| % change | +14 | - | - | -100 |
*Includes intangible assets of £6.8m, or 59p a share | ||||
