Fiberweb's new leaf

Selling the hygiene business in the second half and a £24m rights issue has transformed Fiberweb's financial position from being heavily indebted to having net cash. The disposal also represented a strategic shift to focus on the speciality industrial and construction materials business. While all this was going on, Fiberweb also began implementing its growth strategy by making two acquisitions - Boddingtons and Tubex - to move the group into higher-margin niche markets.

However, progress wasn't smooth with integration and relocation issues, as well as raw material price rises and lacklustre demand - resulting in underlying operating profits falling from £20.9m to £10.8m, and underlying operating margins down from 7.8 per cent to 3.6 per cent. Management has various medium-term targets, too, including plans to achieve growth of twice the GDP in western markets and to deliver a 15 per cent return on capital employed, compared with 5.6 per cent last year.

Fiberweb has scope to improve its performance significantly but, until then, most brokers are sticking to their old forecasts, with Numis Securities expecting pre-tax profit of £13m for 2012 and EPS of 5p (£5.1m loss and 0.8p loss a share in 2011).