Trifast (TRI) turned 40 this month, and the maker of industrial fasteners has celebrated with its biggest profit in five years. Relentless cost-cutting has boosted margins and the acquisition of Malaysia's Power Steel fed the top line. Double-digit earnings growth is likely this year, too, given self-help potential and the quality of business being won.
It was the 160 basis-point increase in operating margin to 6.6 per cent, rather than modest revenue growth, which generated the 45 per cent surge in underlying pre-tax profit to £7.3m. Shedding unwanted warehousing, making fewer deliveries and lots of small savings, mainly in its UK heartland, made the difference. Revenue here was flat, but underlying operating profit grew 51 per cent to £4.1m and, in Europe, an 8 per cent rise in sales doubled profit to £1.1m. Trifast replaced legacy contracts with higher-margin business. Supplying car seat makers, Lear and JCI, and American dashboard manufacturer, IAC, is relatively secure work and highly profitable. Yes, a couple of big contracts went to Chinese rivals, but Trifast has only scratched the surface of Asia's automotive market and has plenty to go for. Most of the 25 per cent jump in revenue there was down to Power Steel.
Broker N+1 Singer expects adjusted pre-tax profit of £8.1m in 2014, giving adjusted EPS of 5.3p (from 4.7p in 2012).
TRIFAST (TRI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 58p | MARKET VALUE: | £62.8m | |
| TOUCH: | 57-58p | 12-MONTH HIGH: | 61p | LOW: 38p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 56p* | NET DEBT: | 9% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 105 | -11.0 | -13.5 | 0.93 |
| 2010 | 85.9 | -2.81 | -2.57 | nil |
| 2011 | 106 | 2.52 | 1.93 | nil |
| 2012 | 113 | 4.76 | 3.45 | 0.5 |
| 2013 | 122 | 6.44 | 4.39 | 0.8 |
| % change | +8 | +35 | +27 | +60 |
Ex-div: 3 Jul Payment: 18 Oct *Includes intangible assets of £18.4m, or 17p a share | ||||
