Fenner – 360p

7 November 2012 – final results

The group has announced record results for the year to 31 August, with revenues increasing by 16% to £831m and underlying pre-tax profit rising by 30% to £103.9m.  Earnings per share on the same basis were up 28% at 36.1p and the dividend for the year rose to 10.5p from 8.0p.  Despite spending £34m on acquisitions and returning £18m to shareholders by way of dividend net debt declined slightly to £97.7m from £101.8m a year earlier.

Both divisions performed well during the year with underlying operating profits at Engineered Conveyor Solutions (ECS) up by 38% to £84.4m, whilst at Advanced Engineered Products (AEP), underlying operating profits were 14% higher at £43.6m.  Looking ahead, slower demand from the US coal sector at ECS in the latter part of the year was offset by stronger demand elsewhere although there may be some pressure in the short-term on profit margins.  AEP is also seeing some pockets of moderate destocking by customers.  After the strong first half in the financial year that has just ended the current financial year is likely to be more geared to the second half.  Nevertheless, standing on a low rating and with excellent growth prospects we continue to rate the shares as a BUY.

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