Industrial conveyor belt maker Fenner (FENR) takes a bath as it issues a profit warning – down 14.5% to 333p. Difficult trading in the US coal industry and an unsuccessful tender in Australia lead the Yorkshire-based group to guide for pre-tax profit up to 15% lower than the consensus figure of £77.6 million for the year running to 31 August.


Web chart - Fenner - May 14


Fenner says trading conditions and the cautious sentiment in the coal industry have deteriorated since the time of its interim results and are 'showing no prospects for imminent improvement'. As a result its Engineered Conveyor Solutions (ECS) business – which accounted for two thirds of sales last year - is expected to experience significantly weaker results in the US than previously anticipated.


In Australia, while trading is said to be improving, the company has been notified that it was unsuccessful in a tender for the supply of a conveyor belt to an iron ore miner in western Australia. It had previously expected to make and deliver this belt during the final quarter of the financial year. Shareholders looking for some succour can note the Advanced Engineered Products (AEP) division (33% of 2013 revenue) remains on track. Readers of Shares should not have been taken by surprise by today's announcement as we flagged the company as looking 'vulnerable' in a wider piece on the engineering sector last month.


N+1 Singer puts its hold recommendation and 395p price target under review and comments: 'It may be some time before we can gain some clarity in the US and until then, Fenner’s share price will be under pressure.' FinnCap echoes this cautious tone – describing the stock as a 'dull hold' and slashing its price target from 450p to 330p. Canaccord Genuity retains the faith with a 'buy' recommendation and 500p target but cautions 'the Australian loss needs greater understanding in the context of pricing, product offering and market position'.

Issue Date: 30 May 2014