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Fenner's likely full-year outcome "comfortably ahead" of expectations

Lower interest charges, project development, and more orders means the Yorkshire-based company looks likely to beat full-year expectations
July 11, 2017

Shares in Fenner (FENR) were on the rise after the industrial manufacturer announced in a trading update that the group’s operating profit for the year to August will be “comfortably ahead” of its previous expectations, helped along by a further increase in the US rig count. Lower interest rate charges are anticipated to be an added benefit after the group repaid $90m (£70m) worth of loan notes from cash reserves after they matured.

IC TIP: Buy at 335.5p

Performance has been strengthening across each product area so far in the financial year, with a noteworthy increase in revenue in the medical business from the development of new customer projects. A growing order book in the oil and gas business has delivered higher sales, and new product launches have helped the industrial business perform ahead of last year.

Free cash flow was said to be in line with expectations after it had more than tripled to £23.9m at the half-year point, aided by reduced capital and dividend commitments. Margins should be improved further at the year end thanks to new product launches, as at the half-year margins were up 240 basis points on the back of in-house efficiencies.