Fiberweb's (FWEB) half-year figures were in line with market expectations, despite prolonged winter conditions having hit demand in its North American markets. But the specialist materials company's cost base is falling, reflecting increased automation, and growth prospects have improved for its key technical fabrics division.
Sales did fall - largely reflecting a £6.8m contraction at the geosynthetics division. But comparisons shouldn't be taken too seriously given that 2012's first half included a cyclical re-stocking phase, driven by the US construction industry. In fact, sales grew 5.5 per cent compared with last year's second half, driven by a pick up in domestic UK construction volumes. A focus on controlling fixed costs boosted the underlying operating margin by 70 basis points, too - to 5.7 per cent - which fed through into a 6 per cent operating profit rise (in constant currency terms) to £8.6m. Fiberweb has also bolstered its balance sheet by repaying borrowings and has reduced its pension obligations - from £26.7m at end the end of June 2012 to just £4m.
Looking forward, a slowdown in Canada and depressed construction demand across continental Europe will continue to weigh on geosynthetics sales. But management is confident about growth prospects generated by the technical fabrics unit's blood filtration products.
Numis Securities expects full-year pre-tax profit of £16.3m, giving EPS of 6.4p (from £13.6m and 5.2p in 2012).
| FIBERWEB (FWEB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 76p | MARKET VALUE: | £132m | |
| TOUCH: | 75p-76p | 12-MONTH HIGH: | 90p | LOW: 61p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 106p* | NET CASH: | £14.5m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 161 | 2.60 | 0.90 | 1.00 |
| 2013 | 152 | 6.70 | 2.60 | 1.20 |
| % change | -6 | +158 | +189 | +20 |
Ex-div: 25 Sep Payment: 1 Nov *Includes intangible assets of £48m, or 28p a share | ||||
