Electronics group Laird has discovered the perils of client concentration. Contract losses with its largest customer, the embattled mobile phone group Nokia, cut profits by two thirds in its once-flagship handset products division - that supplies antennae, hinges and various other speciality components. It's now exiting the loss-making hinge business - the once-profitable legacy of a 2007 acquisition - taking a £18m goodwill write-down as a result
That writedown largely explains the hefty loss. On an underlying basis, however, Laird’s pre-tax profit nearly doubled, even allowing for the lost handset contracts, as a result of strong operational gearing in its other divisions. Meanwhile, sales at the performance materials business, which supplies electromagnetic shielding devices that dampen interference, rebounded 31 per cent and profits there nearly tripled. The group's smaller wireless systems unit performed stronger still. Laird suffered heavily last year from supply-chain destocking but is now reaping the benefits of volume recovery and very weak comparatives. That could go much further, as chief executive Peter Hill says there's little evidence of restocking.
JP Morgan expects adjusted full-year pre-tax profits of £40m and adjusted EPS of 11.7p (2009: £27m/9.6p).
LAIRD (LRD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 120p | MARKET VALUE: | £ 319.6m | |
| TOUCH: | 120-122p | 12-MONTH HIGH: | 200p | LOW: 98p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | NA | |
| NET ASSET VALUE: | 224p* | NET DEBT: | 11% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2008 | 266 | -0.80 | -2.00 | 3.47 |
| 2009 | 275 | -9.50 | -4.60 | 2.10 |
| % change | +3 | - | - | -39 |
Ex-div:03 Nov Payment:03 Dec *Including intangible assets of £555m or 208p per share | ||||
