Molins had already admitted it was never going to repeat last year's stellar numbers, which had benefited from heavy cost-cutting – so a sharp slide in underlying pre-tax profit from £1.7m to £0.8m came as no surprise. The tobacco machinery group is on track to deliver its traditionally stronger second half and meet full-year forecasts, too, making the 6 per cent share price drop on the back of these figures appear overdone.
Moreover, a 14 per cent increase in order intake, driven by both the packaging division, where sales jumped 16 per cent to £15.9m, and tobacco machinery bodes well for the future. Of course, costs increased as Molins spent heavily preparing its tobacco testing business, Arista Labs, for the extra demand from tighter US regulations. Sales there were flat and the swing to a loss of £0.1m was disappointing, but order intake improved and volumes should grow as cigarette manufacturers comply with new rules. The US Food & Drug Administration is to issue guidance on 2013 testing requirements within the next few months and plans to publish regulations in April.
There are no analyst updates yet, but management say they're happy with previous market consensus forecasts for flat full-year underlying pre-tax profit of £4.5m, giving adjusted EPS of 16.4p.
MOLINS (MLIN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 112p | MARKET VALUE: | £22.6m | |
| TOUCH: | 111-114p | 12-MONTH HIGH: | 139p | Low: 81p |
| DIVIDEND YIELD: | 4.7% | PE RATIO: | 3 | |
| NET ASSET VALUE: | 151p* | NET CASH: | £5.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 38.8 | 3.80 | 12.8 | 2.5 |
| 2012 | 39.9 | 2.90 | 10.5 | 2.5 |
| % change | +3 | -24 | -18 | - |
Ex-div: 19 Sep Payment: 11 Oct *Includes intangible assets of £14.6m, or 72p a share | ||||
