BBA Aviation makes most of its money these days selling basic services such as refuelling and engine repair to business jet operators like Netjets. After two years of severe retrenchment - when flying by private jet was stigmatised as a sign of corporate excess - that market began to recover last November, helping BBA grow underlying operating profits 6 per cent over the first half. The reported pre-tax figures were further flattered by lower finance costs and last year's one-off impairment charge on an acquisition in Thailand.
But the recovery has been patchy. While the North American market - easily BBA's most important - took off Europe was grounded by the Icelandic volcano, reducing operating profit by an estimated £600,000. And the group has been held back by its later-cycle aftermarket division, where sales fell 4 per cent to £217m, and its commercial airline servicing business ASIG. Chief executive Simon Pryce said ASIG had not yet seen the benefit of passenger growth this year because commercial airlines have kept a tight lid on jet numbers and costs.
Yet both aftermarket and ASIG should recover in the second half as the wear and tear of six months' growth feeds into repair orders. Liberum Capital expects full-year adjusted pre-tax profits of £87.8m and EPS of 16.2p (£77.2m and 14.3p in 2009).
BBA AVIATION (BBA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 204p | MARKET VALUE: | £876.7m | |
| TOUCH: | 204-205p | 12-MONTH HIGH: | 220p | LOW: 137p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 15 | |
| NET ASSET VALUE*: | 110p | NET DEBT: | 86% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 550 | 25.8 | 5.0 | 2.3 |
| 2010 | 587 | 39.0 | 7.3 | 2.4 |
| % change | +7 | +51 | +46 | +4 |
Ex-div:25 Aug Payment:29 Oct *Including intangible assets of £607m, or 141p a share | ||||
