Good morning! Quiet for news today, but several companies have caught my eye;
Robinson (LON:RBN)
Share price: 198p
No. shares: 17.7m
Market Cap: £35.0m
Robinsons is a plastic & paperboard packaging company, serving the consumer sectors (food, drink, toiletries, etc). It is based in Chesterfield, but recently made an acquisition of a Polish packaging company ("Madrox"), which was a material size acquisition, completed 5 days before the interim period end. The company also has surplus property assets I believe, although I can't remember how significant those are. Checking back, the company referred to, "
Interim results - for the six months ended 30 Jun 2014 are issued this morning, and don't look good to me. The market seems to agree, with the shares down 10% at the time of writing this (09:28). Turnover is almost identical to the prior period H1, at £10.9m. Although note that gross profit is lower by £139k, indicating pricing pressure. This is confirmed in the narrative, which says;
In a period when we have seen both grocery and major brand sales come under pressure from discounters, I am pleased to report that, despite a weak second quarter, our turnover in the first six months of 2014 has remained at last year's level. Gross margins have slipped slightly mainly as a result of cost increases that could not be passed on to our customers.
This rather glosses over the fact that Q1 turnover was up 8%, and therefore Q2 turnover was down 8%, which is a serious reversal. It seems that Robinsons (along with the whole supply chain) are being squeezed, which is why personally I never like investing in any company directly or indirectly supplying supermarkets - they will be permanently under intense margin pressure.
Operating profit - has crashed from £2.1m to £0.1m, although exceptional items account for a good chunk of that. Reversing out exceptional items to get to underlying performance, H1 operating profit this year was £495k vs £1,030k last H1. So that's still a more than halving of profit.
So I'm not quite clear why the company says;
The underlying operating profit pre-exceptional, non-repeating items and the Portland factory rental income is broadly comparable with the previous year.
Ah OK, I've just found the reconciling items, as follows;
Operating costs have risen by £0.2m primarily as a consequence of non-repeating credits that benefited the prior year. Property rental income is £0.2m lower than the same…
