01 Aug 07. Morgan Crucible Co PLC has reported first half pre-tax profit of £36.2m for the six months ending July 4. The figure is some 20 pct up on the 30.1 mln the group posted in the same period last year. The company raised its interim dividend by 50 pct to 2.25 pence and said all three of its divisions are now delivering double digit operating profit margins. The company said it aims to drive this growth into the mid-teens over the coming year. The company’s sales jumped 3.4 pct to 347.8 mln from 336.3 mln last time, while its underlying EPS increased by 32.9 pct to 11.3 pence from 8.5 pence this time last year. The firm said Carbon achieved underlying operating profit margins of 16.5 pct compared to 15.2 pct last time as a result of a strong performance in armour and increased higher margin sales in the Americas and Asia. Morgan said its Technical Ceramics unit saw underlying operating margin growth of just under 1 pct to 11.7 pct through positive mix shift and further manufacturing footprint rationalisation. Insulating Ceramics saw its operating margin widen to 11.3 pct from 9 pct last time with particularly strong growth in the top line due to large project-based business, said the group. The company paid one off restructuring costs of 4.3 mln during the period compared to the £14.4m it shelled-out this time last year. The group recovered £0.8m in legal costs associated with the settlement of anti-trust litigation. Morgan also said that it had acquired a 49 pct stake in NP Aerospace from the Carlyle Group and from management for £71m. NP Aerospace is a composite technical moulding business that develops, manufactures and markets ballistic and non-ballistic products in the defence and civil sectors. It is based in Coventry, UK, with 200 employees and has a strong position in the UK with the Ministry of Defence. Morgan said NP’s management will initially retain a 51 pct equity stake and added that a phased process is in place for Morgan Crucible to acquire a further 21 pct of the equity after three years and move to full ownership in the three years thereafter. The initial investment from Morgan Crucible will be £41m, structured as £36m in a shareholder loan paying around 10 pct per annum, £4.5m in preference shares yielding 8 pct per annum, and 0.5 mln for ordinary equity.
The group said the NP deal would be immediately earnings enhancing and added that it would be seeking out further buys. ‘We continue to search for further acquisitions; but remain determined to maintain our financial and strategic discipline where we believe sellers’ price expectations to be unrealistic,’ said Mark Robertshaw, the group’s chief executive in a statement. ‘The strong organic growth of the group combined with our robust balance sheet puts Morgan Crucible in a strong position to continue to drive towards our target of mid-teen operating profit margins,’ he added. (Source: Thomson Financial/Google)
Comment: Has Carlyle called the top of the armouring cycle? Not known to invest over a long period in a cyclical business, Carlyle has now disposed of the NP stake at a time when some commentators are saying that the ‘armouring boom’ will continue well into the next decade. However others are saying that when the Iraq pullout starts, then armoring orders will start to drop off, including those for MRAP vehicles.
30 Jul 07. Ultra Electronics Holdings reported pretax profits before amortisation and fair value of derivatives of £26.2m for the first half against £23.8m for the same period in 2006, after a strong civil aerospace market drove growth in its Aircraft and Vehicle Systems division. Operating profit before amortisation for the six months to June 30 increased 7 pct to £27.0m, on revenues of £192.9m, up from £180.7m for the same period in 2006. EPS, measured on the same basis, increased 11 pct to 28.2 pence, and the group is paying an interim dividend of 6.7 pence, up from 5.9. Stated H1 pre-tax profits were £25.8m, ag