Plumbing and building supplier BSS is under no illusions about how tough trading conditions are likely to remain. Finance director Roddy Murray conceded that full-year profits for the plumbing and building supplier are likely to be down on 2008.
Operating profits in the first half fell from £33m to £23.4m, and BSS has been busy reducing costs and redeploying resources towards meeting demand for repair and maintenance of existing facilities, much of which is essential spending. However, operating profits in its domestic division were still lower, falling from £18.1m to £13.3m, while margins dipped from 4.2 per cent to 3.1 per cent.
There are also plans to increase the size of the branch network and develop new revenue streams to counter what is widely expected to be a contraction in government spending. Around 10 per cent of group revenue is related directly to government spending, and BSS is already looking into different markets in its industrial division such as above ground drainage. And while operating profits in that business fell 11 per cent to £14.7m, there are several long-term contracts in place such as an upgrading of Ministry of Defence accommodation and work related to the Olympic Games that will provide new revenue in 2010 and 2011.
Panmure Gordon is currently forecasting full-year pre-tax profits of £52m and EPS of 30.2p, rising to £53m and 30.8p for 2011 (2009: £58.8m/33.7p).
| BSS (BTSM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 263p | MARKET VALUE: | £ 327m | |
| TOUCH: | 262-263p | 12-MONTH HIGH: | 340p | LOW: 185p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 191p* | NET DEBT: | 36% | |
| Half-year to 30 Sep | Turnover (£m) | Pretax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2008 | 686 | 29.3 | 16.7 | 1.89 |
| 2009 | 651 | 20.9 | 11.8 | 1.89 |
| % change | -5 | -29 | -29 | - |
Ex-div:02 Dec Payment:06 Jan *Includes intangible assets of £132m or 106p a share | ||||
