Somero Enterprises’ (SOM) shares plummeted in response to its first-half results – the second time that they’ve done so in 2019. In June, the concrete floor specialist revealed that trading for the five months to May had fallen below management’s expectations, mainly because of exceptionally heavy rainfall in the US – its largest market. The group duly guided towards full-year revenues of $87m (£71.3m) – below analysts’ previous estimates. Somero maintained this outlook in July.
But now the range has broadened to $83m-$87m. The US non-residential construction market “remains very healthy”, and with better weather the group expects a second-half improvement here (after an 11 per cent first-half dip for North America). But Europe endured a 26 per cent fall to $5.5m. And while Somero anticipates “solid interest” here, it thinks second-half trading will decline modestly year over year due to concerns around longer-term economic uncertainty, which may affect customers’ purchasing decisions – Purchasing Managers' Indexes already bear this out.
Meanwhile, Middle-Eastern sales reduced from $1m to $0.2m. Somero doesn’t expect to fully recover this shortfall before the year-end, amidst continued uncertainty. China’s sales were flat, although new tariffs are pressurising margins. finnCap now expects adjusted EPS of 33.7¢ for 2019, from 37.7¢ in 2018.
| SOMERO ENTERPRISES (SOM) | ||||
| ORD PRICE: | 224p | MARKET VALUE: | £126m | |
| TOUCH: | 220-228p | 12-MONTH HIGH: | 419p | LOW: 218p |
| DIVIDEND YIELD: | 7% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 86.7¢ | NET CASH: | $15.1m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2018 | 45.0 | 13.6 | 19.0 | 5.50 |
| 2019 | 39.0 | 10.5 | 14.0 | 5.75 |
| % change | -13 | -23 | -26 | +5 |
| Ex-div: | 26 Sep | |||
| Payment: | 17 Oct | |||
| £1=$1.22 | ||||
