It's boom time for the UK’s small but niche manufacturing sector. A combination of a weak pound and booming emerging markets has resulted in some manufacturers such as Elektron expressing big ambitions: chairman Keith Daley believes that, in time, Elektron could become a member of the FTSE 250.
Elektron's results (and share price) are certainly motoring. In the half year to end-July 2010, margins widened appreciably, exceptional costs fell and the company was again blessed with a miniscule tax charge. The main division makes and distributes branded components (notably connectors and switches) and in the six months pushed up operating profits from £800,000 to £2m on sales a third higher at £15.4m. At the same time the business incubator division (bespoke temperature instruments to router cutters) turned a loss of £400,000 into a £600,000 profit.
In July 2010, Elektron purchased a 23 per cent share stake in precision instruments maker Hartest from Viking raider Peter Gyllenhammar and has since completed the £8m acquisition. The jewel of the deal may be Hartest’s Delhi subsidiary as a gateway to sales in India for the whole company. The current half year “has started well” and researcher Brokerlink forecasts 12-months sales some £20m higher at £49m, pre-exceptional profits up from £1.62m to £4.90m as earnings jump from 1.95p to 4.20p.
ELEKTRON (EKI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 32p | MARKET VALUE: | £33.8m | |
| TOUCH: | 31-33p | 12-MONTH HIGH: | 36.25p | LOW: 7.375p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 13p | NET DEBT: | 11% | |
| Half-year to 31 July | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 14.2 | -0.39 | -0.45 | nil |
| 2010 | 20.6 | 2.11 | 2.42 | 0.25 |
| % change | +45 | – | – | – |
Ex-div:22 September Payment:15 December Aim: Electrical equipment | ||||
