Reassuring comments from management alongside solid full-year results pushed Cookson's shares to a seven-month high. Passing on higher commodity metals prices was key to growing sales and margins, while increasing exposure to the Far East is paying dividends, too.
Customers tell chief executive Nick Salmon things are improving: he says core markets should enjoy mid-single-digit growth this year, with further gains in the Americas and Asia offsetting any weakness in Europe. Developing economies last year chipped in 60 per cent of trading profits, which were up 15 per cent to £290m.
Price increases and market share gains meant the larger engineered ceramics division added 13 per cent to sales. But it was in electronics that profits grew most, driven by scorching demand for higher-margin tablet devices and smartphones – Cookson supplies Apple – and the decision to ditch more commoditised lines. The division's trading profits swelled 40 per cent to £99.6m on flat sales, making management's overall margin target of 12 per cent in 2013 (against 10.9 per cent now) look increasingly realistic.
Broker Numis Securities expects pre-tax profits of £283m in 2012, giving EPS of 75p.
COOKSON (CKSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 696p | MARKET VALUE: | £1.92bn | |
| TOUCH: | 695-696p | 12-MONTH HIGH: | 737p | LOW: 386p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 13 | |
| NET ASSET VALUE | 473p* | NET DEBT: | 27% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 1.62 | 152 | 53.5 | 13.0 |
| 2008 | 2.20 | 89.6 | 32.7 | 8.8 |
| 2009 | 1.96 | -20.9 | -17.8 | nil |
| 2010 | 2.55 | 189 | 53.0 | 11.5 |
| 2011 | 2.83 | 212 | 53.2 | 21.75 |
| % change | +11 | +12 | – | +89 |
Ex-div: 2 May Payment: 11 Jun *Includes intangible assets of £1.1bn, or 400p a share | ||||
