Acal has lowered its growth expectations this year following a warning that customers in its core European market are placing orders on “a shorter time scale”, leading to limited visibility and a “softer fourth quarter”. Broker Oriel Securities now thinks growth will stall in the current year and has sliced revenue forecasts by 10 per cent and adjusted profits by a quarter.
It's easy to see why. The electronic component distributor’s revenues tend to track manufacturing PMI surveys, which currently indicate contraction, not growth. At the core electronics division, strength in the UK and Germany - 56 per cent of sales - offset a decline in Spain and a flat performance elsewhere. Still, underlying operating profit at the division leapt 40 per cent to £5.6m, or 89 per cent of the group total before costs. And discontinuing a number of legacy non-specialist products during the period, traditionally more vulnerable in a downturn as customers shop around, is a sensible move. Specialised items now generate 86 per cent of sales and have driven underlying operating margin at the division up by 120 basis points to 5.2 per cent.
Oriel expects adjusted full-year pre-tax profit of £6.8m, giving adjusted EPS of 18.6p (2011: £6.8m/18.3p).
ACAL (ACL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 194p | MARKET VALUE: | £55m | |
| TOUCH: | 185-200p | 12-MONTH HIGH: | 375p | Low: 160p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 175p* | NET CASH: | £0.6m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 127 | -0.40 | -0.70 | 2.33 |
| 2011 | 134 | 1.90 | 5.30 | 2.50 |
| % change | +6 | - | - | +7 |
Ex-div: 28 Dec Payment: 20 Jan *Includes intangible assets of £24m, or 84p per share | ||||
