Fenner's first half profits surged ahead of analysts expectations as the conveyor belt manufacturer's huge pre-crisis investment programme finally began to bear fruit.
Cost-savings and the benefit of bolt-on acquisitions in more resilient areas, such as medical technology and conveyor-belt maintenance, helped Fenner weather the downturn and put the company in a good position to benefit when the recovery kicked in. Another positive factor is the group's strong and lucrative presence in Asia - 39 per cent of operating profits for the period came from the Pacific region. Nick Webster at house broker Numis Securities expects this year and next to be the strongest in Fenner's history and has upgraded earnings forecasts by 10 per cent, pencilling in full-year adjusted pre-tax profits of £43m and EPS of 17p, rising to £52m and 19.5p, in 2011 (£29.8m and 12.8p for 2009).
A placing of 17.3m shares raised £36.2m alongside these results, which led to a modest share price fall, but chief executive Mark Abrahams stressed the new funds would not be used to pay down debt - a major concern last year - but instead to finance further acquisitions. Fenner is already in talks with five companies, and three deals are all but confirmed.
FENNER (FENR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 214p | MARKET VALUE: | £374m | |
| TOUCH: | 213.2-214.5p | 12-MONTH HIGH: | 237p | LOW: 59p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 30 | |
| NET ASSET VALUE: | 121p* | NET DEBT: | 79% | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 257 | 0.6 | 0.20 | 2.2 |
| 2010 | 246 | 12.1 | 4.80 | 2.4 |
| % change | -4 | - | - | +9 |
Ex-div:28 Jul Payment:06 Sep *Includes intangibles of £172m, or 99p per share | ||||
