It’s wasn’t just lower fuel and raw material costs that boosted UK share prices last month - another major reason was the currency rate. The fact that Sterling was weak against the euro in the first six-months of 2008 certainly helped UK international traders such as Filtrona. Now it seems that the company will benefit from a resurgent dollar in the current half-year. From now on, currency gains could hide all sorts of problems including (most notably) an inability to pass on raw material costs.
Filtrona is an obvious currency beneficiary. The company’s sales spread is, broadly speaking, 40 per cent North America, 20 per cent Asia and elsewhere, and the balance is in Europe, with the UK accounting for just 8 per cent. The currency impact is important as a strong euro raised interim end-June 2008 sales by £8.2m, when the total increase was just £7.4m. However, in the half-year Filtrona’s raw material costs increased by £4.6m, but price rises only brought in an extra £3.5m. During the period, the plastics technologies division recorded a 10 per cent increase in turnover to £150.4m, while adjusted operating profits were 11 per cent up at £24.1m. By contrast, sales and profits for the fibre technologies division were down five and 12 per cent respectively at £114.2m and £14.9m. Broker Citigroup forecasts 12-month revenues up from £494m to £520m and adjusted profits £1.7m higher at £59.9m.
FILTRONA (FLTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 168.5p | MARKET VALUE: | £346.5m | |
| TOUCH: | 168.25-168.75p | 12-MONTH HIGH: | 260p | LOW: 136.5p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 69p | NET DEBT: | 92% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2007 | 257 | 26.7 | 8.30 | 2.52 |
| 2008 | 265 | 30.1 | 9.70 | 2.70 |
| % change | +3 | +13 | +17 | +7 |
Ex-div: 24 Sep Payment: 24 Oct | ||||
Click here for a guide to the terms used in IC results tables
