23rd Apr 2014 07:03
LONDON (Alliance News) - Polymer products manufacturer Fenner PLC on Wednesday reported a drop in pretax profit for the first half, saying it was hurt by sterling's gains against all major currencies in which its revenues are generated.
The company posted pretax profit of GBP17.6 million for the six months to February 28, down from GBP26.1 million a year earlier, as revenue dropped 8.1% to GBP359.8 million from GBP391.3 million a year earlier. On a constant currency basis, Fenner said the revenue decline was only 3%.
With operations around the world, Fenner said it is exposed to currency translation risks in respect of its income.
"A particular feature of the period was the strengthening of sterling against the Australian and US dollars, which are the two major currencies in which the group's revenues are generated," it said.
Despite its struggles, the firm said it made progress, with its two main arms - Engineered Conveyor Solutions (ECS) and Advanced Engineered Products (AEP) - both making strides.
ECS had a strong performance in South Africa and China, Fenner said, and continues to make progress in newer markets such as South America, West Africa and the Middle East. However, Fenner said revenue and orders from customers in Russia and Ukraine were weak, primarily due to depreciation of the Russian rouble and Ukrainian hryvnia. The arm also experienced some problems in the US with deferral of maintenance work and de-stocking of belts by ECS' customers.
One the other hand Fenner said AEP's performance during the period was "encouraging". It said despite revenue deferrals it achieved continued revenue growth and enjoyed stable gross margin.
"AEP is expected to continue to make progress towards stated strategic objectives which underpin future growth and continues to be an area of primary focus for acquisitions," Chief Executive Nicholas Hobson said.
"As previously indicated, this year the seasonal weighting of revenues and operating profit towards the second half is expected to be slightly more accentuated than in recent years," he added.
Financially at the period-end net debt stood at GBP134.7 million, down from GBP171.5 million.
The firm increased its interim dividend per share 6.7% to 4.0 pence from 3.75 pence.
At the open, Fenner shares were off 0.6% at 387.60 pence.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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