Carr's Group

LN: CARR

£95.2m market cap

103p last close

Carr’s Group’s Agriculture division serves farmers in the North of England, South Wales, the Welsh Borders and Scotland, the US, Germany and New Zealand. The Engineering division offers remote handling equipment and fabrications to the global nuclear and oil and gas industries.

Investment summary

As flagged in an interim management statement in January, Carr’s Group’s UK agricultural activities have been adversely affected by the mild winter that has depressed demand for feed and feed supplements. Based on the order pipeline, management had expected this would be balanced by overperformance in the Engineering division, but delays in receiving orders will lead to underperformance here as well. We cut our FY20 and FY21 EPS estimates by 26% and 10% respectively and reduce our indicative valuation from 190p/share to 172p/share.

Y/E Aug
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2018A 403.2 19.9 17.7 14.8 7.0 6.3
2019A 403.9 22.1 18.9 15.2 6.8 5.9
2020E 372.0 20.3 15.2 11.7 8.8 8.0
2021E 412.6 22.7 18.5 14.8 7.0 4.7
Industry outlook

Compared to FY19, demand for animal feed in the UK was depressed by the unseasonably mild weather. Moreover, a combination of lower cattle prices, rising input prices and continuing Brexit uncertainty resulted in lower sales of supplements and products related to infrastructure investment. In the US, there was lower demand for feed blocks because of reduced cattle prices and a delayed start to winter feeding. Contract phasing meant that Engineering had a slow start to the year. However, management anticipates that the strong pipeline, which includes a US$8.5m robotics contract from the US primarily for delivery in FY20, will result in full year divisional performance ahead of management’s previous expectations.

Last updated on 26/03/2020
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 29.3
Forecast gearing ratio (%) 22
Price performance
%
1m
3m
12m
Actual (24.8) (33.6) (24.3)
Relative* (7.1) (11.4) (6.3)
52-week high/low 166.0p/88.0p
*% relative to local index
Key management
Tim Davies CEO
Neil Austin FD
Peter Page Non-executive chairman

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