Yule Catto - Specialty Chemical Manufacturer
Yule Catto & Co (LON:YULC) is an international producer of specialty chemicals, with its products used by its customers in the manufacture of a range of products, such as coatings, building products, gloves, carpets, paper, PVC, adhesives, plastics, and pharmaceuticals. YULC has three divisions - Polymer Chemicals, Pharma Chemicals and Impact Chemicals.
YULC issued its Interim results for the six-months to 30-Jun-10 this morning, which demonstrate a continued growth in revenues, profits and EPS, with a resumption of the dividend for good measure. It seems to be a well-run and focused business that is set for revenue growth from all divisions, especially from the developing world, where 45% of group revenue is derived.
- Underlying total sales* increased by 24% to GBP326.6m (2009: GBP264.3m)
- Underlying profit before taxation* increased by 26% to GBP24.0m (2009: GBP19.0m) building on the similar increase delivered in 2009
- Earnings per share* of 12.6p (2009: 10.0p), up 26%
- Net debt* GBP76.5m, down GBP11.5m from 2009 year end
- Polymer Chemicals operating profit up 19%
- Interim dividend resumed at 2p per share
- 45% of Group revenue now generated in Asia and other high growth developing countries
- Additional Polymers capacity in Asia now under construction
Already on the website is this hugely informative presentation of the Interim results and the group's segmental splits, input costs, etc... It's well worth a read and to see the shift in geographic splits over the last five years.
In terms of forecasts, the consensus view before these results was for EPS of 22-23p for the full year. With 12.6p from H1, more than half of the forecast is already in the bag so I would expect to see broker upgrades being issued in the remainder of this week. With a conservative estimate of 25p for FY10, YULC is on a P/E of 8.6, and dropping under 8 for 2011 at current growth rates.
I welcome thoughts or comments.
SM
Disclosure of Interest: The author holds shares in Yule Catto & Co (LON:YULC)
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6 comments
Acquisition of German company PolymerLatex announced yesterday from a PE house.
http://www.independent.co.uk/news/business/sharewatch/market-report-positive-reaction-for-yule-catto-acquisition-2159709.html
A very healthy jump in the price yesterday afternoon buoyed by a possible bid, as speculated here:
Just to mention that Yule Catto & Co (LON:YULC) joined the FTSE 250 this week (or should that be FTSE262?) which has and will help support the recent price rise.
Good points, Mark, thanks for pointing these liabilities out. Of course, the net debt figure was included in the 'Highlights' as it has been steadily reducing, but the pension scheme liability is buried as this has increased in recent years.
So in aggregate these liabilities have reduced by £44m in 3.5 years, a less impressive total than the debt reduction shows.
Indeed, and the Board has determined that the total dividend for the year will be not less than 5 pence. ;o)
SM
Thanks SM, looks interesting but there is a bit of a fly in the ointment with debt and pension obligations.
The market cap. is £309.5m but adding in £76.5m of net debt and £83.5m of net pension deficit (total scheme liabilities £241.5m as at end 2009) takes the EV to £469.5m - so not quite as cheap as it looks.
The interim dividend of 2.0p, however, sweetens the deal somewhat. ;0)
Cheers,
Mark
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