Recession hit Elektron’s sales hard in 2009-10, but the company still managed to report a profits turnaround. Closer analysis shows that the £5.7m fall in turnover was more than covered by £6.4m decline in cost of sales. The main reason was the ongoing switch of manufacturing from the UK to Tunisia and China where assembly operator costs are £2,000 a year against £12,000 at home. Profits were also boosted by a fall from £3.2m to £1.4m in exceptional costs, mainly redundancy and restructuring, relating to off-shoring
To keep margins up, Elektron has gone higher tech and instead of waiting for orders to come in, as it used to, it’s now looking for business and particularly from original equipment manufacturers. This year budgeted sales and marketing expenditure will jump 85 per cent to £4.3m while the technical budget will rise by over half to £1.3m. There’s also a £1.2m research and development project due for launch in 2011 and the company even has its own technology incubator subsidiary.
Broker finnCap expects sales to jump 20 per cent to £36.1m, adjusted pre-tax profits to rise from £1.6m to £3m and underlying EPS to increase 76 per cent to 3.43p in the 12 months to January 2011.
ELEKTRON (EKT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 21p | MARKET VALUE: | £18.5m | |
| TOUCH: | 20.5-21.5p | 12-MONTH HIGH: | 22.5p | LOW: 7p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 62 | |
| NET ASSET VALUE: | 21p | NET DEBT: | 18% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 22.5 | 1.74 | 1.65 | 0.35 |
| 2007 | 26.0 | 0.51 | 0.51 | 0.40 |
| 2008 | 34.9 | 1.95 | 2.85 | 0.45 |
| 2009 | 35.6 | -2.27 | -2.36 | 0.46 |
| 2010 | 29.9 | 0.22 | 0.34 | 0.50 |
| % change | -16 | - | - | +9 |
Ex-div: 16 Jun Payment: 17 Aug Aim: electronic and electrical equipment | ||||
