Join our community of smart investors

Clipper drops on sudden results release

The logistics group is "aware" of challenges in the retail maket, which means its re-evaluating new contract conversion rates
July 30, 2018

Clipper Logistics’ (CLG) shares have plummeted, reflecting management’s concerns over future contract conversion rates. The group, which provides delivery operations and services mainly to retail clients, said “wider forces” negatively affecting the sector had forced it to bring “an element of caution” to future planning. But chairman Steve Parkin insisted recent contract wins and a strong new business pipeline means the group is still well positioned for future growth.  

IC TIP: Sell at 316p

The market seems less convinced. These results were released ahead of schedule, with brokerage N+1 Singer pointing out that pre-tax profits had fallen short of forecasts. Net debt was also higher, and is projected to keep climbing in FY2019 and FY2020. Thankfully, two recently completed acquisitions – first of warehousing and distribution service provider Tesam and second of specialist provider of consumer electronic repair services RepairTech – have both been immediately earnings enhancing.

But have investors been spooked, not only by these unforeseen results, but by Mr Parkin’s decision to sell shares just a few months ago? He wasn’t alone: chief executive Tony Mannix and chief financial officer David Hodkin also sold 498,237 shares each, equating to more than £2m apiece. At the time, a spokesperson said the disposals had been completed to satisfy institutional demand.

CLIPPER LOGISTICS (CLG)  
ORD PRICE:316pMARKET VALUE:£321m
TOUCH:313-317p12-MONTH HIGH:494pLOW: 304p
DIVIDEND YIELD:2.7%PE RATIO:22
NET ASSET VALUE:39p*NET DEBT:81%
Year to 30 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20142013.92.8na
20152359.57.34.8
201629013.110.36.0
201734016.112.57.2
201840018.014.28.4
% change+18+12+14+17
Ex-div:6 Sep   
Payment:1 Oct   
*Include intangible assets of £37.2m, or 37p a share