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Latchways enjoys aerospace lifeline

RESULTS: Safety harness specialist posts record results as aerospace sales take off and, with a growing US order book, we upgrade our advice

Safety harness specialist Latchways (LTC) has reported record sales and profits, buoyed by orders from the aerospace industry and overseas which underpinned a sharp second-half recovery. Revenues jumped by a third on the first half and were up by a quarter on the second half of last year. Reported profits benefited from one-off gains, but strip these out and pre-tax profit improved 3.3 per cent to £10.3m.

IC TIP: Hold at 1,045p

The Safety Products division - responsible for three-quarters of Latchways turnover - was key to the improved performance. Revenues here increased 7 per cent, having been down 10 per cent at the half-year stage. Demand from Airbus and British Airways for the Wingrip product lifted UK sales by 14 per cent to £12.5m and offset ongoing weakness in UK construction.

In the US, after a weak first half, the new Personal Rescue Device (PRD) helped lift sales there by 7 per cent and a recently signed deal with 3M, a harness manufacturer, is expected to give a significant boost to orders in the region. PRD accounted for £1.2m of Latchways annual sales. And the rest of the world segment posted double-digit revenue growth, mainly reflecting orders from Australia and New Zealand.

Assisted by new distribution agreements for the PRD and Self Retracting Lifelines, house broker N+1 Singer expects adjusted pre-tax profits to rise 10 per cent to £11.2m, giving EPS of 73.1p (from 70.3p previously).

LATCHWAYS (LTC)

ORD PRICE:1,045pMARKET VALUE:£117m
TOUCH:1,030-1,060p12-MONTH HIGH:1,097pLOW: 935p
DIVIDEND YIELD:3.4%PE RATIO:15
NET ASSET VALUE:292p*NET CASH:£10.5m

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200937.08.3151.623.4
201033.97.6249.325.8
201139.69.3361.329.6
2012**41.49.9366.032.7
201342.410.9474.536.0
% change+2+10+13+10

Ex-div: 14 Aug

Payment: 13 Sep

*Includes intangible assets £6.44m, or 57p a share

**Excludes a special dividend of 40p a share