Over the years, Alumasc (ALU) has rationalised its product offering, moving into specialist areas of the building materials market increasingly governed by stringent regulatory and environmental standards. So, while the group isn’t immune to the cyclic nature of the sector, this combination means the business model is now more resilient when market demand is ebbing away.
This is borne out by a modest 1.9 per cent decline in like-for-like revenues at the half-year mark, achieved against “a background of flat UK construction market demand”. The pull-back was primarily linked to the timing of export orders at the Levolux and Gatic businesses. These timing issues also constricted the underlying operating margin, down 60 basis points to 7.6 per cent, though input cost inflation, and a lag in passing price increases through to customers didn’t help.
The group has expanded its water management capabilities through the acquisition of Essex-based Wade International for £8m (net of cash), a move designed to bolster export opportunities, particularly in Middle Eastern markets.
Peel Hunt trimmed its forecasts for the June 2018 year-end, with adjusted pre-tax profits reduced by £0.3m to £9.5m and EPS reduced by 0.6p to 21p (2017: £9.0m and 20p).
| ALUMASC (ALU) | ||||
| ORD PRICE: | 158p | MARKET VALUE: | £ 56.1m | |
| TOUCH: | 156-160p | 12-MONTH HIGH: | 203p | LOW: 157p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 57p* | NET CASH: | £2.4m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 50.7 | 3.6 | 8.2 | 2.85 |
| 2017 | 47.8 | 3.0 | 6.9 | 2.95 |
| % change | -7 | -16 | -16 | +4 |
| Ex-div: | 01 Mar | |||
| Payment: | 06 Apr | |||
| *Includes intangible assets of £16.5m, or 46p a share | ||||
