Specialist plastics manufacturer Filtrona delivered solid full-year returns, with revenues and earnings broadly in line with market consensus, but input costs are proving to be a cause for concern.
Operating profits increased by 33 per cent to £75m after allowing for restructuring, acquisition and amortisation costs, and management's focus on working capital management ensured that this figure was covered by operating cash flow.
Much of the improvement in fortunes was attributable to an 81 per cent hike in profits to £28.8m at Filtrona's Protection & Finishing Products division, augmented by an increase in operating margins to 22.3 per cent, from 16.7 per cent in 2009.
Margins could have been better still had the division not experienced rising prices for raw materials through much of last year. This remains a problem for the group as a whole, despite the best efforts of management to mitigate their impact, and the board will undoubtedly be concerned that this situation could be exacerbated further by the current spike in global oil prices.
Returns from the group's Filter Products division, which accounts for more than 40 per cent of revenues, were slightly disappointing - adjusted operating profits at £23.7m declined by 1.7 per cent at constant exchange rates.
UBS anticipates 2011 full-year adjusted EPS of 23.25p (from 21.4p in 2010).
| FILTRONA (FLTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 296p | MARKET VALUE: | £609m | |
| TOUCH: | 295-296p | 12-MONTH HIGH: | 303.5p | LOW: 180p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 91p* | NET DEBT: | 46% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 517 | 52.2 | 15.3 | 6.9 |
| 2007 | 494 | 51.7 | 15.3 | 7.6 |
| 2008 | 432 | 46.7 | 17.1 | 7.78 |
| 2009 | 444 | 32.3 | 5.8 | 7.78 |
| 2010 | 490 | 61.6 | 23.3 | 9 |
| % change | +10 | +91 | +302 | +16 |
Ex-div:13 Apr Payment:28 Apr *Includes intangible assets of £107.3m, or 50p a share | ||||
