Turning around a company while the global economy is in the grips of a recession is no easy task. However, non-woven fabrics group Fiberweb went some small way towards convincing the market that such an achievement could be possible when it reported a 36 per cent rise in underlying operating profit to £18.8m - sending the shares 15 per cent higher.
It’s not hard to see why the market found it easy to get excited by signs of strength. The final dividend of 2.5p equates to a 9 per cent return on its own, and management believes the full-year payout could be maintained in 2009.
However, the future is far from certain. Certainly, the group’s defensive hygiene business - which provides fabrics for products such as nappies and accounts for 56 per cent of underlying profits - held up well during the year. But the industrial division suffered due to exposure to the ailing construction and automotive industries and there could be more pain to come. What’s more, while debt has been falling in constant currency terms, it still looks high.
Broker Cazenove believes ongoing cost-cutting and lower raw material prices will help boost 2009's EPS to 5.83p (2008: 3.89p).
| Fiberweb (FWEB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 27p | MARKET VALUE: | £33m | |
| TOUCH: | 27-28 | 12-MONTH HIGH: | 78p | LOW: 23p |
| DIVIDEND YIELD: | 15.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 160p | NET DEBT: | 76% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 553 | 27.1 | 12.3 | nil |
| 2005 | 603 | 20.1 | 12.5 | nil |
| 2006 | 500 | -49.8 | -35.5 | 3.95 |
| 2007 | 474 | -100 | -76.3 | 4.20 |
| 2008 | 513 | -25.2 | -18.0 | 4.20 |
| % change | +8 | - | - | - |
Ex-div: 22 Apr Payment: 27 May | ||||
