Shares in Yule Catto slumped to record lows despite increasing underlying profits in the face of a difficult economic backdrop, as investors reacted to the cancellation of a final dividend payment.
The market was also spooked by what looks to be a serious trading slowdown in the final quarter of the year, including a 14 per cent decline in volumes in its key polymer division, represents 84 per cent of total sales. Chief executive Adrian Whitfield said that demand for its polymer used in paints and adhesives remains "depressed", while broker Cazenove said that it expects volumes to be down by around a quarter in 2009.
But Mr Whitfield was keen to stress that, after a two-year restructuring process that has seen the company divest several underperforming business, the company's market position remained strong. Financing concerns also eased as the company revealed that net debt had fallen by £40m to £135m over the year. The group renewed the bulk of its banking facilities, and a reduction in capital expenditure - alongside the axed dividend - should see net borrowings fall to £110m by the year-end.
The falling oil price is expected to translate into lower costs in 2009, and broker Cazenove forecasts full-year pre-tax profits of £25.9m and EPS of 12.9p.
| YULE CATTO (YULC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 40p | MARKET VALUE: | £58.6m | |
| TOUCH: | 40-41p | 12-MONTH HIGH: | 162p | LOW: 40p |
| DIVIDEND YIELD: | 9.9% | PE RATIO: | 2 | |
| NET ASSET VALUE: | 39p* | NET DEBT: | 202% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 537 | 31.8 | 13.2 | 13.4 |
| 2005 | 556 | 32.0 | 15.1 | 9.0 |
| 2006 | 566 | 13.6 | 2.4 | 9.3 |
| 2007 | 513 | 34.0 | 17.9 | 9.6 |
| 2008 | 602 | 38.9 | 22.2 | 4.0** |
| % change | +17 | +14 | +24 | -58 |
Ex-div: na Payment: na *Includes intangible assets of £155m, or 106p a share **Interim dividend only, no final dividend | ||||
