Management Consulting Group's (MMC) highly cyclical business did a decent job at demonstrating some resilience in 2012 - a message management has attempted to drive home with a useful dividend increase. The company was able to counter the headwinds of economic uncertainty by winning business in more promising markets and regions, which include consumer-focused clients in North America and Asia, emerging markets and the natural resources sector.
However, the world's economic plight - particularly that of Europe, where the group generates 55 per cent of its revenue - weighed on performance all the same. While restructuring and headcount reductions kept underlying operating margins broadly stable, £5.3m of associated costs scarred the bottom line. In addition, reduced revenue, the weakness of the euro and a near doubling of employee share awards to £3.1m all took their toll on the reported result. Underlying operating profits were down 9 per cent at £25.7m.
The company is now experiencing some stability in its weaker markets and says orders stand at an encouraging level. Even following a £2.1m increase in 2012 net debt of £30.3m remains comfortably below underlying cash profits. Broker Peel Hunt forecasts pre-tax profit of £24.6m and EPS of 3.2p this year (from £23.5m and 3.4p in 2012).
Management Consulting Group (MMC) | ||||
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ORD PRICE: | 29p | MARKET VALUE: | £141m | |
TOUCH: | 28.5-29p | 12-MONTH HIGH: | 40p | LOW: 21p |
DIVIDEND YIELD: | 2.9% | PE RATIO: | 12 | |
NET ASSET VALUE*: | 39p* | NET DEBT: | 16% |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
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2008 | 343 | -20.0 | -6.40 | 1.3 |
2009 | 276 | 6.3 | 0.40 | 0.40 |
2010 | 270 | 14.3 | 2.40 | 0.45 |
2011 | 303 | 23.2 | 3.70 | 0.75 |
2012 | 286 | 16.0 | 2.40 | 0.83 |
% change | -6 | -31 | -35 | +10 |
Ex-div: 15 May Payment: 2 Jul *Includes intangible assets of £266m, or 54p per share |