Buying Australia's Tasman Oil Tools in 2010 was great business for Northbridge Industrial Services. Renting its equipment to oil and gas companies brought in £7.1m of revenue and over £2m of profit last year, more than expected, and over half this year's forecast turnover is already in the bag. There's been growth elsewhere, too, and the level of contracted rental demand and equipment orders since the year-end is promising.
Sales of kit did especially well in 2011, rising 61 per cent to £10.7m, easily outpacing the 12 per cent growth in the hire business, despite Tasman's contribution. Lower-margin product sales now make up 43 per cent of revenue, a trend that could last another 18 months, say management. Of course, Northbridge prefers renting, but demand for manufactured equipment for testing generators and turbines powered profits up 14 per cent at UK unit Crestchic, and extra capacity acquired at its Burton site will drive expansion in the US, already expected to be a "strong contributor" in 2012. Luckily, this has offset a lean time for late-cycle big rental projects. Look out for an upturn here late this year and into 2013.
Excluding the £1.46m loss on a cancelled rental contract in Yemen, pre-tax profit grew 18 per cent to £4.6m and Westhouse Securities expects current year profits to rise to £5.8m, giving EPS of 28.3p (25.7p in 2011).
NORTHBRIDGE INDUSTRIAL SERVICES (NBI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 279p | MARKET VALUE: | £42.8m | |
| TOUCH: | 275-283p | 12-MONTH HIGH: | 297p | LOW: 209p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 29 | |
| NET ASSET VALUE*: | 72p | NET DEBT: | 40% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 11.2 | 1.63 | 15.3 | 3.0 |
| 2008 | 15.7 | 2.97 | 25.3 | 3.9 |
| 2009 | 12.7 | 2.21 | 19.1 | 4.1 |
| 2010 | 19.3 | 3.68 | 25.8 | 4.6 |
| 2011 | 24.9 | 2.89 | 15.1 | 5.0 |
| % change | +29 | -22 | -41 | +9 |
Ex-div: 16 May Payment: 8 Jun *Includes intangible assets of £11.1m, or 72p a share | ||||
