Fenner's (FENR) reliance on troubled commodity markets continued to cause it a great deal of pain in the first half of its 2016 financial year. Demand for its plastic seals, bearings and pipes was hammered by the plummeting value of crude oil, while appetite for its conveyor belts was negatively impacted by weak coal, iron ore and copper prices.
The upshot was underlying operating profit nearly halving to £15m in the period, which was hardly a surprising outcome for a company facing such a vast array of headwinds. In fact, these depressing numbers were in line with expectations and, aside from the 75 per cent cut to the half-year dividend, could even be perceived as encouraging.
Management has spent the past year restructuring operations to better protect Fenner during the downturn. Chairman Mark Abrahams voiced his confidence that these measures are now sufficient to offset ongoing market volume declines. Forecasts for the full year are unchanged.
Broker N+1 Singer expects adjusted pre-tax profit of £23.3m for the year to August 2016, giving EPS of 8.6p, down from £42.5m and 15.5p in FY2015.
| FENNER (FENR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 131p | MARKET VALUE: | £252m | |
| TOUCH: | 130-132p | 12-MONTH HIGH: | 237p | LOW: 95p |
| DIVIDEND YIELD: | 6.9% | PE RATIO: | na | |
| NET ASSET VALUE: | 142p* | NET DEBT: | 54% | |
| Half-year to 29 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 348 | -5.1 | -3.9 | 4.0 |
| 2016 | 277 | -23.1 | -9.8 | 1.0 |
| % change | -20 | - | - | -75 |
Ex-div: 28 Jul Payment: 7 Sep *Includes intangible assets of £183m, or 94p a share | ||||
