Filtrona's better-than-expected first half has triggered a round of full-year upgrades. Progress has been driven by economic recovery and higher sales, plus the benefits of recent cost-cutting, which worked through to the two highest-margin divisions, protection & finishing and porous technologies.
The protection and finishing division saw an exceptionally strong pick-up in the MSI oilfield products business, which benefited from an increase in the drill rig count in North America and in shale gas drilling. And there was a strong growth story in the inkjet arm of the porous technologies business, which has become a big supplier to original equipment suppliers in the US. Elsewhere, there was some margin improvement at the coated and security products division, with good growth from the Payne authentication system and, although demand stayed weak in filter products, productivity improvements led to better margins there, too.
With seasonal factors reasserting themselves, second-half profits will be slightly lower than those in the first half. Nevertheless, the second half should confirm that Filtrona has returned to growth in spite of the doubts about the levels of economic activity.
So Bank of America Merrill Lynch is now expecting that full-year adjusted pre-tax profits will rise from £46.2m to £63.3m, giving EPS of 20.5p, up from 14.8p.
FILTRONA (FLTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 238p | MARKET VALUE: | £489m | |
| TOUCH: | 237 - 238p | 12-MONTH HIGH: | 250p | LOW: 157p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 81p* | NET DEBT: | 61% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 228 | 18.5 | 1.30 | 2.70 |
| 2010 | 248 | 33.1 | 13.2 | 3.00 |
| % change | +9 | +79 | +915 | +11 |
Ex-div: 29 Sep Payment: 29 Oct *Includes intangible assets of £101m, or 49p a share | ||||
