Scapa's (SCPA) new American medical devices business, WEBTEC, offset weakness in European industrial markets and destocking in the healthcare sector. Further cost-cutting at the tapes and adhesives firm improved margins, too, and underlying operating profit up almost a third to £6.5m keeps it on track to hit full-year targets.
Without the £12.1m of revenue from WEBTEC, sales fell £4.7m, which was largely due to a 9 per cent drop to £69.9m at the industrial division. Sales of Renaults and Peugeots have hit the skids, so demand for Scapa's tape used to wrap engine cables is down. Lower infrastructure spend is hurting, too. Still, French construction business Barnier grew 6 per cent and Scapa is making money making branded tape for Travis Perkins. Work for VW and Mercedes should also ramp up and telecoms giant Ericsson is using Scapa's weatherproof tape on its base stations in Brazil, China and India.
The fledgling electronics division is bulking up slowly in Asia. Supplying adhesives for smartphone maker HTC and a well-known e-book tablet maker helped halve losses there to just £0.2m. Scapa is also making progress on margins. Cutting £800,000 of costs in the period pushed them up 120 basis points to 6.3 per cent, and chief executive Heejae Chae wants 8 per cent within the next 12-24 months.
Broker Arden Partners expects adjusted pre-tax profit of £12.3m for the full year, giving adjusted EPS of 5.2p (from £9.5m and 4.2p in 2012).
SCAPA (SCPA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 65p | MARKET VALUE: | £95.0m | |
| TOUCH: | 64-65p | 12-MONTH HIGH: | 71p | Low: 46.5p |
| DIVIDEND YIELD: | na | PE RATIO: | 13 | |
| NET ASSET VALUE: | 38p* | NET CASH: | £8.5m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 98.6 | 5.5 | 2.2 | nil |
| 2012 | 103.2 | 6.3 | 2.7 | nil |
| % change | +5 | +15 | +23 | - |
*Includes intangible assets of £30.8m, or 21p a share | ||||
