Fiberweb reported an 8 per cent like-for-like revenue growth in the first half and a trebling of underlying EPS to 2.8p, helping to underpin its credentials as a recovery play and the prospect of a cash return next year adds to its appeal.
Following the sale of its hygiene business last November, Fiberweb is focused on industrial and construction materials and has money to invest in improving efficiency and driving growth. To this end, two acquisitions were made last year and have now been integrated. Progress was made despite the technical fabrics division, which accounts for 73 per cent of revenue and 80 per cent of profits, being hit by weakness in Europe. Group-wide, raw material price increases and cash-generative but margin-eroding inventory reductions also dampened performance. Underlying operating profits for fabrics fell 36 per cent to £9m, but the geosynthetics division moving from a £3.5m loss to a £2.3m profit, spurred by a recovery in the US housing market.
Management has a number of medium-term targets, including 8 to 10 per cent operating margins compared with 4.9 per cent in the first half. The company is also expected to unveil plans for a return of capital by mid-2013, which broker Peel Hunt believes could be as much as 30p a share.
Peel Hunt forecasts full-year pre-tax profits of £14.1m and EPS of 5.4p (from a loss of £5.1m and loss per share of 0.8p in 2011).
| Fiberweb (FWEB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 69p | MARKET VALUE: | £120m | |
| TOUCH: | 68-69 | 12-MONTH HIGH: | 70p | LOW: 39p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 49 | |
| NET ASSET VALUE: | 99p* | NET CASH: | £7.9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 152 | -7.4 | -2.2 | 1.0 |
| 2012 | 161 | 2.9 | 1.0 | 1.0 |
| % change | +6 | - | - | |
Ex-div: 3 Oct Payment: 5 Nov *Includes intangible items of £45m, or 26p a share | ||||
