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Alent outperforms market

RESULTS: A recovery in European car sales will be a major driver for Alent this year
March 5, 2014

Alent (ALNT), Cookson’s former performance-materials business, had a better than expected second half, winning market share and outperforming end markets. Underlying operating profit still fell 3 per cent to £94.1m, but a likely upturn in European car sales should drive demand for its coatings in 2014. More smartphone and tablet launches would be a tailwind, too - though predicting electronics industry trends is difficult, which perhaps explains management’s conservative outlook.

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Much will depend on consumer demand. Last year’s rapid decline in personal-computer sales will not be repeated this year, guesses chief executive Steve Corbett. That spells good news for Alent’s higher-margin assembly-materials division, which supplies solder pastes used in printed circuit boards. A faster-growing global economy will help, too. Expect more product launches than last year, especially in smartphones and tablets, says Mr Corbett. And a better year for the smaller surface-chemistries business looks likely. Profits in the unit fell 10 per cent at constant currencies, driven by a sharp drop in sales of its high-margin copper damascene additive. Strip that out and margins were unchanged.

Deutsche Bank expects adjusted pre-tax profit of £93m in 2014, giving adjusted EPS of 25.7p (from £88m and 24.1p in 2013).

ALENT (ALNT)

ORD PRICE:321pMARKET VALUE:£ 894m
TOUCH:319-322p12-MONTH HIGH:414pLOW:  298p
DIVIDEND YIELD:2.7%PE RATIO:15
NET ASSET VALUE 112p*NET DEBT:31%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201181494.427.0NA
201271473.216.28.25
201368577.722.18.6
% change-4+6+36+4

Ex-div: 14 May

Payment: 19 Jun

*Includes intangible assets of £289m, or 104p per share