British Polythene Industries (BPI) has negotiated volatile polymer prices and weak demand from the construction sector for things such as damp proof courses and tanking membranes to beat profit forecasts. What's more, having increased profit before tax, pensions costs and restructuring by 7 per cent to £20.4m last year, management says prospects for 2013 "look equally good".
BPI is so confident it is increasing capital expenditure to more than £20m for each of the next two years, mostly on new products and increased manufacturing capacity for higher-margin agricultural film and retail food packaging, which together already generate 70 per cent of sales. And it can afford to. Despite a £6m increase in inventories and similar rise in capital spending, strong cash generation cut net debt by a quarter to £23.2m.
Investment has already benefited Europe, where the group's operating margin is near 10 per cent. Shutting its loss-making plant in Swansea and working more efficiently elsewhere has now also increased margins in the UK - albeit to just 2.6 per cent. Investment here should increase both output and margins further before the end of 2013.
Broker Investec Securities expects adjusted pre-tax profit of £21m in 2013, giving adjusted EPS of 53.7p (up from 51.2p last year).
BRITISH POLYTHENE INDUSTRIES (BPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 498p | MARKET VALUE: | £132m | |
| TOUCH: | 495-500p | 12-MONTH HIGH: | 498p | LOW: 308p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 11 | |
| NET ASSET VALUE | 134p | NET DEBT: | 40% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 481 | 3.9 | 10.7 | 14.5 |
| 2009 | 425 | 11.80 | 30.9 | 11.0 |
| 2010 | 478 | 16.7 | 52.2 | 11.5 |
| 2011 | 508 | 19.2 | 52.8 | 12.5 |
| 2012 | 479 | 19.4 | 47.1 | 13.2 |
| % change | -6 | +1 | -11 | +6 |
Ex-div: 13 Mar Payment: 18 Jul | ||||
