Somero mkt Cap £150m, price 265p
FY16 results look good. Revenues grew 13% to $79m. The biggest driver was the strength in US non residential construction, with N American sales growing by over $7m to $56.6m and now represent 70% of Group sales.
Europe was also strong growing from $6m to $8m and now account for 10% sales. China was up 5% to $6m of sales and Australia grew over 100% to $2m of sales.
Less good were was LATAM and SE Asia where combined sales fell from $3.3m to $2.1m.
one gripe would be that the company doesn't give its organic constant currency rates. (what exactly does the PR firm do for its money if it isn't advising the company to give these rates?)
The outlook for sales remains good. Clearly the biggest issue is the health of US non residential sales. As long as these remain in good order then I suspect the shares will continue to do well.
Encouragingly the business is on track to meet its 2018 target of over $90m of sales. This is despite the strong USD which has a dampening effect on sales in foreign currencies translated back into USD. In fact with a fair wind and some currency weakness in the USD, that target COULD be achieved a year early.
By product the biggest growth came from parts and services (21% group sales), which tend to be high margin, and is a good sign for the Group. Ride on machines also outperformed the rest of the Group. the only area to see a decline was remanufactured machines. This is ok, as financing is clearly available for contractors to buy new machines.
Gross margins edged up to 56.8% from 55.8%.
there was marginal positive operating leverage in operating expenses, which grew by 11% to $23.9m, vs revenues up 13%, so edged down as a percentage of sales.
I wish the company would provide more detail on the drivers of sales now and in the future as they see them. They could do more to educate investors.
Cashflow, Dividends and Balance Sheet
The turnaround is a amazing for a company that had debt going into the GFC in 2007/8. Net cash on the balance sheet is now $20m, despite paying $4m…
Breakout gap on open to new highs as well
