17th Feb 2015 11:35
LONDON (Alliance News) - Brammer PLC on Tuesday said its pretax profit fell in 2014 as one-off costs offset a rise in revenue, but it hiked its dividend on the back of a robust underlying performance.
Brammer, an industrial maintenance, repair and overhaul products company, said its pretax profit for the year to December 31 was down to GBP17.7 million from GBP32.9 million the year before. Pretax profit was dragged lower by a rise in distribution costs, up to GBP200.8 million from GBP165.5 million a year earlier, and by a GBP12.6 million restructuring charge related to the closure of the Buck & Hickman National Distribution Centre in Coventry and the merging of its supply chain operations across the UK.
Revenue for the year was up to GBP723.6 million from GBP651.9 million, despite being held back by currency translation from its European operations, but boosted by a solid performance in Brammer's Scandinavian business.
The group declared a final dividend of 7.1 pence per share, up 4.4%, resulting in a total dividend for the year of GBP10.7 pence per share, up 4.9% year-on-year. Brammer said the dividend was lifted on the back of the group's stronger underlying results, stripping out exceptional items, with its underlying pretax profit falling by only GBP0.3 million to GBP35.1 million.
"In 2014 we have continued to demonstrate our resilience whilst expanding our European footprint into Scandinavia. We have invested heavily in growth drivers to counter difficult market conditions," said Chief Executive Ian Fraser.
"We expect that our investment in growth drivers will enable us to continue to gain market share and provide good revenue and profit growth in the years to come," Fraser added.
Brammer said it saw an overall improvement in sales per working day growth over the year, up 14.5% on the back of a stronger performance in the second half. In the second half, the group's sales per working day growth hit 15.5%, against 14.1% year-on-year growth in the first half. Brammer provides all of its sales per working day growth figures in constant currencies.
The group posted robust sales per working day growth figures across its regional operations, except in the UK where sales fell 2.8% over the year, driven lower by a 4.1% decline in the second half. The UK business was hurt by six large customers in the country cutting their combined spending by more than 20%, owing to challenging conditions in their end markets.
The weakness in the UK partially offset a strong performance across the rest of its operations, with German sales growth at 8.1%, French growth at 8.5%, Benelux growth of 4.7% and a strong performance in Spain, where sales growth hit 15%. It also posted a surge in sales growth in Eastern Europe, where sales rose 41% over the year.
N+1 Singer reiterates a Sell rating on the stock and holds its 440 pence price target, saying that Brammer remains hindered by difficult market conditions, though it said the strategic initiatives it has put in place have generated revenue.
The broker sees Brammer's European and industrial exposure as a key impediment to it improving, though it says this exposure makes the stock an interesting one to consider once a recovery in those markets finally emerges. It adds, however, that it expects that recovery to take some time to materialise.
Investec also sees the potential for long-term growth at Brammer and keeps its Buy rating while also upgrading its price target to 385 pence from 370 pence.
It says Brammer's results are in line with its revised expectations and it remains a buyer based on the potential for long-term growth and ongoing consolidation in the market.
The stock was quoted down 2.0% at 342.75p late Tuesday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
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