19th Sep 2019 13:21
(Alliance News) - Braime Group PLC on Thursday said profit fell in the first half of 2019 as a softening in the US agricultural market hurt revenue and predicted a "very challenging" second half.
The metal pressing firm posted a GBP1.1 million pretax profit for the six months ended June 30, an 8.3% reduction from its GBP1.2 million profit a year before.
This was due to a weakened US performance, which helped drag revenue down 5.5% to GBP17.1 million from GBP18.1 million.
"The USA operation, which is a very significant contributor to group profitability, has seen a significant softening in the agricultural market, from customers, end users and equipment manufacturers, unprecedented in recent times, caused by the deterioration in US-Sino trade relations," Braime explained.
Braime raised its interim dividend to 3.60 pence per share, up 2.9% from the 3.50p per share interim dividend a year before.
"Last year's very positive economic environment boosted our growth; however this year, indications are that the second half of the year will remain very challenging. This is due to uncertainties surrounding the ongoing trade conflict between the US and China, and the escalating tariff war, which is not only affecting America and China but also reverberating around the global markets, so we do not currently anticipate repeating the strong results seen in the second half of last year," said Braime.
"Closer to home, Brexit remains frustratingly, an unknown quantity. We have prepared as well as any business can under the circumstances, but the actual impact is difficult to ascertain, not just with regards to trading but also to foreign currency fluctuations. As much of our income derives from overseas earnings, a weak sterling will boost reported earnings when retranslated.
"However, should sterling strengthen significantly, the converse would apply. Depending on the form Brexit finally takes, as a major exporter, the actual event is likely to cause some degree of short-term disruption. However, we consider that as the majority of our sales presence and projected growth is already outside the EU, the long-term effects are unlikely to be significant for the group."
Shares in Braime were untraded on Thursday afternoon in London, last closing at 1,800.00 pence.