Last close As at 05/08/2026
GBP1.32
▲ 1.00 (0.76%)
Market capitalisation
GBP69m
Research: Industrials
Carr’s Group
Written by
Carr's Group |
Diversity helps keep group on track |
Interim management statement |
General industrials |
11 January 2017 |
Share price performance
Business description
Next events
Analysts
Carr's Group is a research client of Edison Investment Research Limited |
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Once again, the in-built diversity provided by having two divisions operating in different sectors and internationalisation within those two divisions shows its worth. During the first 18 weeks of FY17 a better than expected performance from the Agricultural division was balanced against a significant contract delay in the Engineering division, with the group as a whole trading in line with management’s expectations for the full year. We leave our estimates and valuation unchanged.
Year |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
08/15 |
331.3 |
14.2 |
10.6 |
3.7 |
13.7 |
2.5 |
08/16 |
314.9 |
14.0 |
10.6 |
3.8** |
13.7 |
2.6 |
08/17e |
332.2 |
14.6 |
10.7 |
3.9 |
13.6 |
2.7 |
08/18e |
336.0 |
15.3 |
11.2 |
4.0 |
13.0 |
2.7 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Excluding 17.54p special dividend.
Stronger than expected Agriculture performance
Confidence appears to be returning to the UK agriculture sector, boosting sales of feed blocks, machinery and agricultural inputs generally, while Carr’s continues to gain share in the compound feed market. Prior year investment in the Country Store retail chain and improving farmer confidence delivered growth exceeding management expectations. In the US, sales of feed blocks were similar to the previous year as ranchers adjusted to lower beef prices.
Single significant contract delay affects Engineering
The remote handling businesses are performing in line with expectations, with Wälischmiller working on significant contracts such as the first self-propelled vehicle mounted Telbot for the vitrification plant in Karlsruhe and MSM busy with the life of plant contract for Sellafield. However, there has been a significant delay with a contract in the UK Manufacturing business that was expected to utilise a significant proportion of FY17 production capacity and is not expected to commence until towards the year end. Management is taking a range of actions to limit the financial impacts of this delay, but notes that divisional performance will be lower than originally expected despite some recent contract wins that will benefit H2. Management is confident that the recovery in UK agriculture will compensate for the FY17 shortfall in Engineering and lack of growth in the US. The divisional order book and pipeline for FY18 and beyond are encouraging.
Valuation: At a moderate discount to market
We retain our estimates and leave our valuation unchanged at 161p/share. Triggers to close the valuation gap include news of management action to reduce the impact of the delayed manufacturing contract and stabilisation in the US beef cattle market.
Exhibit 1: Financial summary
£m |
2015 |
2016 |
2017e |
2018e |
2019e |
|
Year-end Aug |
||||||
PROFIT & LOSS |
||||||
Revenue |
|
331.3 |
314.9 |
332.2 |
336.0 |
340.0 |
EBITDA |
|
16.0 |
16.5 |
17.1 |
18.2 |
18.8 |
Operating Profit (pre amort. of acq intangibles & SBP) |
12.6 |
12.7 |
13.2 |
14.1 |
14.7 |
|
Amortisation of acquired intangibles |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Share-based payments |
(0.5) |
0.1 |
(0.5) |
(0.5) |
(0.5) |
|
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Operating Profit |
12.1 |
12.8 |
12.7 |
13.6 |
14.2 |
|
Net Interest |
(0.7) |
(0.8) |
(0.6) |
(0.8) |
(0.8) |
|
Share of post-tax profits in JVs and associates |
2.3 |
2.1 |
2.0 |
2.0 |
2.1 |
|
Profit Before Tax (norm) |
|
14.2 |
14.0 |
14.6 |
15.3 |
16.0 |
Profit Before Tax (FRS 3) |
|
13.7 |
14.1 |
14.1 |
14.8 |
15.5 |
Tax |
(3.0) |
(2.9) |
(3.3) |
(3.5) |
(3.7) |
|
Profit After Tax (norm) |
11.2 |
11.1 |
11.3 |
11.8 |
12.3 |
|
Profit After Tax (FRS 3) |
10.7 |
11.2 |
10.8 |
11.3 |
11.8 |
|
Post tax profit (loss) relating to discontinued operations |
3.0 |
2.8 |
0.0 |
0.0 |
0.0 |
|
Minority interest |
(1.7) |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
|
Net income (norm) |
9.5 |
9.5 |
9.8 |
10.2 |
10.8 |
|
Net income (FRS 3) |
12.0 |
12.5 |
9.3 |
9.7 |
10.3 |
|
Average Number of Shares Outstanding (m) |
89.6 |
90.1 |
91.3 |
91.4 |
91.4 |
|
EPS - normalised (p) |
|
10.6 |
10.6 |
10.7 |
11.2 |
11.8 |
EPS - normalised fully diluted (p) |
|
10.2 |
10.2 |
10.3 |
10.8 |
11.4 |
EPS - FRS 3 (p) |
|
13.4 |
13.8 |
10.1 |
10.7 |
11.3 |
Dividend per share (p) |
3.7 |
3.8 |
3.9 |
4.0 |
4.2 |
|
EBITDA Margin (%) |
4.8 |
5.2 |
5.2 |
5.4 |
5.5 |
|
Operating Margin (before GW and except.) (%) |
3.8 |
4.0 |
4.0 |
4.2 |
4.3 |
|
BALANCE SHEET |
||||||
Fixed Assets |
|
86.5 |
63.1 |
73.0 |
72.4 |
71.8 |
Intangible Assets |
11.3 |
11.7 |
16.0 |
16.0 |
16.0 |
|
Tangible Assets and Deferred tax assets |
75.2 |
51.4 |
57.0 |
56.4 |
55.7 |
|
Current Assets |
|
120.4 |
139.1 |
118.3 |
123.2 |
128.4 |
Stocks |
35.0 |
33.4 |
32.4 |
33.0 |
34.0 |
|
Debtors |
65.3 |
57.2 |
55.5 |
56.5 |
57.5 |
|
Cash |
20.1 |
48.4 |
30.5 |
33.7 |
36.9 |
|
Current Liabilities |
|
(73.8) |
(69.0) |
(66.3) |
(66.1) |
(64.1) |
Creditors including tax, social security and provisions |
(55.0) |
(47.3) |
(47.7) |
(50.5) |
(51.5) |
|
Short term borrowings |
(18.7) |
(21.6) |
(18.6) |
(15.6) |
(12.6) |
|
Long Term Liabilities |
|
(34.2) |
(23.1) |
(23.1) |
(23.1) |
(23.1) |
Long term borrowings |
(25.7) |
(18.6) |
(18.6) |
(18.6) |
(18.6) |
|
Retirement benefit obligation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Other long term liabilities |
(8.5) |
(4.5) |
(4.5) |
(4.5) |
(4.5) |
|
Net Assets |
|
99.0 |
110.1 |
101.9 |
106.4 |
112.9 |
Minority interest |
(11.9) |
(13.4) |
(13.4) |
(13.4) |
(13.4) |
|
Shareholders equity |
|
87.1 |
96.7 |
88.6 |
93.0 |
99.6 |
CASH FLOW |
||||||
Operating Cash Flow |
|
14.3 |
11.7 |
20.3 |
19.3 |
17.8 |
Net Interest |
(0.5) |
(0.5) |
(0.6) |
(0.8) |
(0.8) |
|
Tax |
(3.9) |
(1.1) |
(3.3) |
(3.5) |
(3.7) |
|
Investment activities |
(4.0) |
(2.9) |
(7.9) |
(3.5) |
(3.5) |
|
Acquisitions/disposals |
(1.7) |
22.7 |
(4.2) |
(1.8) |
0.0 |
|
Equity financing and other financing activities |
(0.3) |
1.0 |
0.0 |
0.0 |
0.0 |
|
Dividends |
(3.1) |
(3.3) |
(19.2) |
(3.6) |
(3.7) |
|
Net Cash Flow |
0.8 |
27.5 |
(14.9) |
6.2 |
6.2 |
|
Opening net debt/(cash) |
|
24.6 |
24.4 |
(8.1) |
6.8 |
0.6 |
HP finance leases initiated |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
|
Other |
0.6 |
(5.1) |
0.0 |
0.0 |
0.0 |
|
Closing net debt/(cash) |
|
24.4 |
(8.1) |
6.8 |
0.6 |
(5.6) |
Source: Company accounts, Edison Investment Research
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