Management at Epwin (EPWN) will be hoping that sterling's recent appreciation against the US dollar and euro gathers momentum through 2018. The building products manufacturer saw top-line growth on the back of new product launches (and a full-year contribution from its National Plastics acquisition), but profitability was constrained due to currency-linked cost inflation, together with a £7.1m increase in administration expenses. Even on an adjusted basis, operating profit was down 12.9 per cent to £22.3m, but other factors beyond management's control undermined financial performance and investor sentiment.
The group took a £3.9m debt charge when one of its two largest customers, Entu (UK), entered administration, while the impact of the decision by another key customer – FTSE 250 constituent SIG (SHI) – to sell its plastics distribution business to a competitor is as yet unquantified.
To improve efficiencies and margins, management is consolidating operations, and has closed one of the glass production plants, while hiving off a subsidiary that primarily served now-defunct customer Entu. Although rationalisation measures will continue through 2018, management has also made plans to develop new warehousing facilities in Telford.
Analysts at Panmure Gordon are forecasting a drop in adjusted pre-tax profit to £18.4m in 2018, giving EPS of 10.5p (from £21.1m and 11.8p in 2017).
EPWIN (EPWN) | ||||
ORD PRICE: | 78p | MARKET VALUE: | £111m | |
TOUCH: | 75-78p | 12-MONTH HIGH: | 130p | LOW: 65p |
DIVIDEND YIELD: | 8.6% | PE RATIO: | 11 | |
NET ASSET VALUE: | 66p* | NET DEBT: | 27% |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2013** | 264 | 7.7 | 1.7 | na |
2014 | 260 | 18.6 | 11.8 | 4.24 |
2015 | 256 | 18.6 | 11.3 | 6.37 |
2016 | 293 | 23.0 | 13.9 | 6.60 |
2017 | 298 | 12.0 | 7.08 | 6.69 |
% change | +2 | -48 | -49 | +1 |
Ex-div: | 10 May | |||
Payment: | 4 Jun | |||
*Includes intangible assets of £69.6m, or 49p a share **Pre-IPO figures |