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Rain falls on Somero’s parade

Non-US markets have traded “at comparable levels to 2018”
June 10, 2019

Shares in Somero Enterprises (SOM) plummeted by around a fifth after the group – a provider of high-tech concrete-levelling equipment and training – warned on sales and profits for 2019. Trading during the five months to May dropped below management’s expectations, predominantly because of bad weather in the US – its largest market. Indeed, an average of 36.2 inches of rain fell over the ‘Lower 48’ (contiguous) states from May 2018 to April 2019 – the highest level recorded in over 120 years.

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This led to delayed project starts – slowing down customers’ purchasing activity during March and April, which are traditionally strong trading months for Somero. And while things got better towards the end of May – and management expects the weather, and US trading, to improve throughout the rest of 2019 – it doesn’t think it can fully recover the shortfall.

Somero now expects full-year revenues of around $87m (£68.6m), cash profits of $28m and net cash of around $18m. Broker finnCap had previously anticipated sales and profits of $99.4m and $31.4m. The house broker has also cut its dividend forecast from 27.8ȼ to 19.6ȼ. Last year, Somero reported revenues of $94m and adjusted cash profits of $30.8m.