Trifast's (TRI) October profit warning set the tone for the half-year report. The industrial fastenings supplier dampened market expectations, largely as a consequence of industry-wide problems in the automotive sector resulting in lower volumes to existing clients and lead times being extended on new contracts.
Trifast’s underlying operating profit was down 8 per cent on the prior year, falling to £11m, with the associated margin contracting by 0.7 percentage points to 10.6 per cent. The biggest hit to the operating margin was in the European business, which saw a 3.2 percentage point fall to 8.5 per cent. Trifast said the Italian domestic appliance sector cut volumes as a result of “reputational issues” at one of its largest customers.
The company said new business in Thailand made up for some of the European and Chinese sales declines, although this is still a relatively small chunk of revenue. Overall revenue in Asian was down 6.8 per cent year on year to £29m. As flagged earlier in October, UK revenues were down as well, with “planned production line stops” from April hurting order numbers in the half.
Trifast is focusing more on ‘tier 1’ customers and original equipment manufacturers, and said its 2.5 per cent year-on-year drop in automotive sales (which provide a third of revenue) compared well to a 7.3 per cent fall in global automotive production levels.
Broker Stifel expects full-year revenue of £202m and adjusted earnings per share of 12.6p, a 3 and 16 per cent drop on FY2019, respectively.
| TRIFAST (TRI) | ||||
| ORD PRICE: | 165p | MARKET VALUE: | £ 202m | |
| TOUCH: | 165-166p | 12-MONTH HIGH: | 242p | 149p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 101p* | NET DEBT: | 13%** | |
| Half year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 105 | 8.0 | 4.93 | 1.20 |
| 2019 | 103 | 7.9 | 4.92 | 1.20 |
| % change | -2 | -1 | -8 | - |
| Ex-div: | 12 Mar | |||
| Payment: | 09 Apr | |||
| *Includes intangible assets of £46m, or 38p per share **Excludes lease liabilities of £16m | ||||
