A healthy rise in first-half revenues at speciality chemicals outfit Carclo (CAR) is 'not a one-off', insists chief executive Chris Malley. Speaking to Shares after the group posted a 17.2% hike in group revenues to £57.2 million, Malley says the results reflect excellent sales progression driven for the most part by its Technical Plastics and LED Technologies divisions.

In the year to the end of September, underlying operating profit increased 82.2% to £4.7 million, while underlying operating margins rose 290 basis points to 8.2%.


Carclo Technical Plastics (CTP) manufactures fine tolerance moulded plastic components used in medical, telecom and electronics products. This division has benefitted from significant capital expenditure over the past year or so as evidenced by expansion of facilities in China, India and the Czech Republic. First half revenue in this business was up 4.9% to £31.5 million while underlying operating profit rose by 11.5%. Carclo's management is targetting operating margins of 10% by full-year 2017.

The LED division on the other hand saw significantly more robust revenue growth, adding 47.6% to £21.2 million. The group continues to target operating margins around the 13-14% mark.

Today's 11% jump in the share price, to 125p, comes as welcome relief to embattled shareholders. The stock was hammered last month when Volkswagen's emissions scandal delayed the launch of a new vehicle which was to have used Carclo's LED lighting. There's no impact of that delay in these figures but investors shold expect the second half performance to take a hit, perhaps to the tune of £0.7 million. The company hopes that this likely setback will be offset by new contract wins, including a light package for a European supercar manufacturer. Carclo also sees expansion possibilities into the higher volume end of the big-ticket car makers as a major growth driver going forward.

Issue Date: 17 Nov 2015