Currency in GBP
Last close As at 03/02/2023
GBP1.22
▲ 5.50 (4.74%)
Market capitalisation
GBP109m
Research: Industrials
The recent trading update from Carr’s Group notes that FY22 performance (year ended 3 September 2022) was in line with management expectations and ahead of FY21, while trading so far in FY23 has been in line with management expectations and ahead of FY22. There will be a delay to the publication of the group’s audited FY22 results because a separate audit of the associate that was sold as part of the disposal of the group’s Agricultural Supplies division is now required for independence reasons.
Carr’s Group |
Publication of FY22 results delayed |
Trading update |
General industrials |
23 November 2022 |
Share price performance Business description
Analyst
Carr’s Group is a research client of Edison Investment Research Limited |
The recent trading update from Carr’s Group notes that FY22 performance (year ended 3 September 2022) was in line with management expectations and ahead of FY21, while trading so far in FY23 has been in line with management expectations and ahead of FY22. There will be a delay to the publication of the group’s audited FY22 results because a separate audit of the associate that was sold as part of the disposal of the group’s Agricultural Supplies division is now required for independence reasons.
Year end |
Revenue (£m) |
PBT* (£m) |
EPS* |
DPS |
P/E |
Yield |
8/20** |
395.6 |
15.0 |
12.0 |
4.75 |
8.8 |
4.5 |
8/21 |
417.3 |
16.6 |
13.2 |
5.00 |
8.0 |
4.7 |
8/22e |
474.6 |
17.3 |
12.7 |
5.20 |
8.3 |
4.9 |
8/23e |
138.2 |
10.5 |
8.8 |
5.40 |
12.0 |
5.1 |
Note: FY20, FY21 and FY22e include the Agricultural Supplies division, which has not been treated as a discontinued business. *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Restated.
Following the disposal of the Agricultural Supplies division, which was announced at the end of August 2022, the group is composed of the Speciality Agriculture and Engineering divisions. In Speciality Agriculture, FY22 adjusted operating profit was ahead of management expectations but down slightly versus FY21 because of margin erosion in H122. Divisional margins were notably improved in H222. Volumes in the UK and Ireland were solid, supported by strong farmgate prices. While US volumes were adversely affected by the prolonged drought in the northern part of the country, management had anticipated this.
As indicated in the August trading update, while FY22 adjusted operating profit in Engineering was significantly ahead of FY21, it was behind management expectations. The division benefited from a strong order book, particularly for the precision engineering business, but global shortages of components such as motor controllers meant that the robotics business was not able to recognise milestone payments against some contracts. In addition, the costs associated with completing a major nuclear defence project were higher than management had anticipated.
Management notes that there will be a delay to the publication of the group’s audited FY22 results because a separate audit of the group’s associate company, Carrs Billington Agriculture (Operations), part of the Agricultural Supplies division that has been sold, is now required for independence reasons. Carr’s Group had a 49% shareholding in this associate throughout FY22, with the share of profit representing approximately 8% of the group’s total adjusted profit before tax. The delay in completing the audit means that the listing of the company’s shares will be temporarily suspended with effect from 4 January 2023 until the audited FY22 results are completed in mid-January 2023.
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Research: Industrials
Kendrion’s Q322 results showed a relatively good performance under difficult market conditions, with continued pressure from a shortage of materials, volatile demand and inflation. Revenues in the quarter were stronger than we expected; the Industrial division remained the top performer, with revenues up 27% y-o-y, while the Automotive division returned to growth with an 8% top-line increase. Kendrion expects the current difficult environment to continue for the rest of the year and into 2023 but is confident that the trends towards electrification and clean energy will drive strong growth in the medium term. The average of our three valuation methods points to a fair value of €22.2 per share.
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