Porvair (PRV:AIM) chief executive Ben Stocks says he is optimistic the business can ride out Brexit uncertainty as long as demand holds up in other countries.

Earning around four-fifths of its revenue outside the UK and with manufacturing facilities based around the world, environment tech specialist Porvair is insulated to an extent from political uncertainty around UK trade relationships.

In a call following the announcement of half-year results, Stocks said the business had been looking carefully at the impact of volatile exchange rates on its business.

‘So long as there’s no sort of economic shock, we’re fairly confident,’ says Stocks.

‘We’ve looked at things like currency flows and a strong dollar... we are broadly hedged for the rest of the year, so it will not make much difference.

‘We do some manufacturing in Europe and the UK but less than 10% of our revenue goes from Europe to the UK and the UK to Europe.

‘We think we’ll be OK as long if the fundamental demand drivers remain.’

PORVAIR - Comparison Line Chart (Rebased to first)

Porvair, which manufactures specialist filters and environmental technology, delivered revenue growth of 13% delivering a top line result of £52.1 million.

Four contracts contributed an unusually high amount of revenue, three in gasification and one in nuclear.

Contract flow has become ‘lumpier’ recently, Stocks admits, with the business historically generating most of its revenue and profit from the repeat sale of bespoke products with long life cycles.

Growth was also boosted slightly by weaker sterling and the acquisition of TEM Filters in December 2015.

Earnings per share increased 9% to 7.5p and expectations for the full year ahead look good, said Stocks, assuming no general deterioration in the global economy.

Shares in Porvair trade 1.2% lower at 331p, roughly in-line with the general market.

House broker Peel Hunt forecasts earnings per share in the year to 30 November 2016 at 16p, according to Thomson Reuters data.

'Porvair’s continuous investment in new products, well-executed acquisitions and tight cost control has helped earnings hit our expectation at the half-way point,' writes Peel Hunt analyst Andrew Shepherd-Barron.

'The outlook is as confident as it can be given the recent Brexit inspired political and economic uncertainty, helped by the positive dollar exposure.

'We still see a plausible scenario of EPS growth of 14% CAGR for the next two years, well ahead of current forecasts.

'Recent highly profitable but lumpy gasification installation projects have distracted from the constantly improving earnings quality.'

Issue Date: 27 Jun 2016