14th Jan 2009 10:30
14 January 2009
Fenner PLC ("Fenner")
AGM Statement 2009 and Interim Management Statement
My report to shareholders of 12 November 2008 described the progress achieved in a year of strong organic and acquisitive growth.
Group revenue for the year amounted to £437.8m (2007 £380.8m). Operating profit before amortisation of intangible assets acquired and exceptional items increased to £49.3m (2007 £39.0m) and operating profit increased to £43.8m (2007 £38.2m). Adjusted earnings per share before amortisation of intangible assets acquired and exceptional items amounted to 17.5p per share (2007 15.1p) and basic earnings per share amounted to 15.5p per share (2007 15.0p).
The Board is recommending a final dividend of 4.4p per share which gives a total distribution for the year of 6.6p per share (2007 6.225p), a 6% increase on 2007.
As we expected, our first quarter trading has been satisfactory and consistently ahead of last year.
Our Advanced Engineered Products Division has experienced some softening of demand with like for like volumes down by 4%. However, the niche nature of these businesses has enabled trading margins to be reasonably well protected. Some de-stocking by our customers has been experienced in the industrial markets, exacerbating volume reductions which have occurred in the silicone hose and some hydraulics markets. Elsewhere, the resilience of the medical technical weaving activities and energy related process sealing applications has been demonstrated.
Our Conveyor Belting Division has performed very much in accordance with our previous guidance. The industrial market activities in Continental Europe and the Americas have seen reduced volumes and increased margin pressure. The coal markets, which are the largest drivers for our conveyor belting business, are continuing to display resilience, supported by healthy order flows. Our predominant involvement in thermal coal has provided stability for both our belt manufacturing and the recently acquired service businesses, with particularly strong performances through the period in the Asia Pacific region.
Our capital investment programme for wide belt manufacture in North America is now completed and gives us increased confidence in our performance capabilities. As planned, this includes the closure of our manufacturing in Atlanta with a one-off cost of approximately £1m. This provides us with greater operating flexibility, efficiency, cost reductions and quality improvements resulting in higher levels of customer service. Our Australian programme is progressing well and is anticipated to be commissioned on time in order to support our local customer base in reducing their costs and increasing productivity.
Borrowing levels are in accordance with our forecasts and committed facilities and comfortably comply with our financial covenant requirements. These are: (i) 'normalised' operating profit being at least 2 times the net interest charge, and (ii) net debt being less than 3.5 times 'normalised' EBITDA. The earliest date on which any of our committed financing is due for re-negotiation is in approximately 4 years and leaves our balance sheet in a robust position to support our current and immediate future plans.
The deteriorating wider economic conditions over recent months and the consequent impact on some of our markets, whilst limited, has necessitated a review of our cost base. Accordingly, where appropriate, cost reduction initiatives have been implemented for those parts of the Group experiencing weaker demand, predominantly in some industrial markets. Our adjusted cost base going forward will incorporate annualised cost savings in excess of £11m and regrettably a reduction of 290 people. The associated one-off cost of these actions is approximately £3m.
These measures keep our costs in line with the level of business we are currently experiencing. If the economy deteriorates further we have contingency plans for extra cost savings, although underlying demand levels do not at present require this. Undoubtedly the global economic conditions are providing an increasingly challenging environment within which to achieve business objectives. Given these challenging conditions and the actions we have already taken, we continue to believe we have the ability to operate at a similar level to last year.
Certain statements contained in this document constitute forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause the actual results, performance or achievements of Fenner, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such statements.
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For further information please contact:
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Fenner PLC |
01482 626501 |
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Mark Abrahams, Chief Executive |
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Richard Perry, Finance Director |
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Weber Shandwick Financial |
020 7067 0700 |
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Nick Oborne/ Stephanie Badjonat |
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Fenner PLC