The US Food and Drug Administration’s (FDA) decision to shunt confirmation of a new US tobacco testing regime from April to December proved costly for Molins (MLIN). It meant a quiet first half for the engineer’s Arista Laboratories division, which spent heavily gearing up for the changes. Thankfully, growth elsewhere has been rapid and underlying pre-tax profits almost doubled to £1.5m. It should be much more once the Americans have finished dithering.
Molins’ tobacco machinery division made most of the money. A sharp increase in both sales and margins swelled operating profit by 63 per cent to £1.3m, and order prospects are described as "relatively strong". Crucially, weakness at Arista was more than offset by progress at Cerulean, the scientific instruments business. Demand from China and a big one-off contract helping to equip a new tobacco laboratory in North Africa grew profit from scientific services by 23 per cent, generating a small profit. Lower-margin work diluted the impact of top-line growth at the packaging machinery division. Parachuting senior sales and marketing staff into Asia to service machinery used by big food companies there was expensive, too. Still, the business remained profitable and should benefit over the next few years.
Broker Canaccord Genuity expects full-year adjusted pre-tax profit of £5.3m, giving adjusted EPS of 22p (from £4.9m/21.8p in 2012).
MOLINS (MLIN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 167p | MARKET VALUE: | £33.7m | |
| TOUCH: | 165-170p | 12-MONTH HIGH: | 180p | Low: 106p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 212p* | NET CASH: | £5.6m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 39.9 | 0.20 | 1.00 | 2.50 |
| 2013 | 47.8 | 0.70 | 3.50 | 2.50 |
| % change | +20 | +250 | +250 | - |
Ex-div: 18 Sep Payment: 10 Oct *Includes intangible assets of £14.9m, or 74p per share | ||||
