It's been a long hard road to recovery for adhesives and tapes maker Scapa, and it still has some hurdles to overcome. But a much improved underlying trading performance aided cash generation and has prompted the board to reinstate the dividend.
Scapa's management is pursuing a performance improvement programme across its 14 manufacturing locations in nine countries. That has resulted in better margins, more productivity and generated cash for investment in new products, automation and the reduction of a hefty pension deficit. The pension deficit remains an issue - the £43.1m hole will need ongoing contributions of more than £4m a year - but it is more manageable.
Scapa's adhesives and tapes are used in industrial applications from consumer electronics to automotive, as well as in niches such as healthcare. Exposure to industrial and housebuilding sectors in the US saw first-half growth there wiped out in the second half, while the European business also suffered a second-half slowdown as industrial demand faltered. Nonetheless, management is confident that its internal improvements can go some way to mitigating these headwinds. Housebroker Arden Partners is forecasting EPS of 4p for 2009.
Scapa Group (SCPA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 29p | MARKET VALUE: | £42m | |
| TOUCH: | 28-30 | 12-MONTH HIGH: | 33p | LOW: 23p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 28p* | NET CASH: | £14.8m | |
| Year to 31 Mar | Turnover (£m) | Pre-tax Profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 188.0 | -8.20 | -2.8 | 0.3 |
| 2005 | 187.9 | -3.60 | 1.5 | 0.1 |
| 2006 | 191.5 | -14.5 | -10.6 | nil |
| 2007 | 184.3 | 12.9 | 9.2 | nil |
| 2008 | 170.1 | 7.40 | 3.1 | 0.75 |
| % change | -8 | -43 | -66 | - |
Ex-div: 25 Jun Payment: 7 Aug *Includes intangible assets of £9.7m, or 7p a share | ||||
