Last close As at 05/08/2026
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▲ 1.00 (0.76%)
Market capitalisation
GBP69m
Research: Industrials
Carr’s Group has announced an updated strategy that offers the potential for value realisation and creation from a number of avenues. These include: value realisation of the Engineering Division; the ability to significantly reduce central costs; and longer-term value creation in the Agriculture Division as a focused business with recovery potential and a strategy to leverage its strong market positions for growth.
Carr’s Group |
An enhanced value-creation strategy |
Interim results |
General industrials |
18 April 2024 |
Share price performance
Business description
Analyst
Carr’s Group is a research client of Edison Investment Research Limited |
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Carr’s Group has announced an updated strategy that offers the potential for value realisation and creation from a number of avenues. These include: value realisation of the Engineering Division; the ability to significantly reduce central costs; and longer-term value creation in the Agriculture Division as a focused business with recovery potential and a strategy to leverage its strong market positions for growth.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
08/22 |
124 |
11.2 |
10.0 |
5.2 |
11.5 |
4.5 |
08/23 |
143 |
7.5 |
6.2 |
5.2 |
18.5 |
4.5 |
08/24e |
149 |
8.8 |
7.5 |
5.2 |
15.4 |
4.5 |
08/25e |
155 |
10.6 |
9.0 |
5.4 |
12.8 |
4.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Carr’s has announced a strategy update to ‘explore options to maximise shareholder value with regard to the Engineering Division’. This reflects management’s views that the lack of synergies between the two divisions combined with the carrying cost of the central head office function is inefficient and not conducive to the requirements of investors. The Agriculture Division is clearly a work in progress with internal actions and market recovery expected to significantly improve the medium-term performance. Focus is therefore on how to realise value from the strongly performing Engineering Division.
Interim results were in line with our expectations, while management guidance for the full year is unchanged, as are Edison’s forecasts. Engineering Division revenues of £28.5m were up 26.1%, with robotics particularly strong and up 60.4%. Adjusted operating profit of £2.4m was up 119%, with margins of 8.4%. The order book remains robust at £57.8m, with further post half year-end intake moving the order book above the £59.8m record seen at the end of FY23, providing good coverage into the next financial year. The Agriculture Division continued to face challenging markets. Revenues decreased 7.5% in the period due to volume (UK +11%, US 18%) and some reversal of price inflation seen in FY23. Adjusted operating profit reduced by 17.4% to £4.9m, albeit margins remained positive at 9.4%, down from the previous year’s 10.5%. The UK market is showing signs of improvement, but in the US cattle herds are not expected to show any recovery until FY25 at the earliest. Group underlying operating profit was flat at £5.8m, as was underlying PBT at £5.6m, while underlying EPS at 4.8p was down 4%. The dividend declared of 2.35p increased due to the change in policy affecting timings. Edison expects flat dividends for the full year. Cash flow benefited from £4m of deferred receipts from the disposal of the Agriculture Supplies business. Net cash at the period end was £8.0m.
Our valuation remains unchanged, with a DCF-based valuation of 149p and a sum-of-the-parts using quoted peers of 124p. There are clearly two catalysts that could deliver and potentially enhance this valuation: the disposal of the Engineering division at or above the £70m (11x EBIT) in our valuation; and the recovery in the Agriculture division, with Edison forecasting £5.4m profit in FY24 versus £9.5m reported in FY21 before the market softness.
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Research: Metals & Mining
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