The first quarter trading update also sees the company note visibility in its Engineered Conveyor Solutions (ECS) business is 'more limited than usual' and flag a deferral of customer sales in its Advanced Engineered Products (AEP) arm which will mean operating profit and revenue is weighted more heavily to the second half of the year.
We suggested the recovery in the Fenner share price had run its course in our piece on the mining services industry last November.
While full-year guidance is unchanged in constant currency terms the company notes sterling has strengthened against all the major currencies in which its revenues are generated. It says underlying operating profits for the 12 months to 31 August 2013 would have reduced by £9 million if rates were at their 31 December 2013 level.
ECS derives a significant chunk of its revenues from the mining sector and the decline in order intake is partly attributed to corporate activity among North American coal miners. AEP is more diversified, producing advanced polymers, hydraulic seals and other engineered solutions for clients in sectors such as medical and oil and gas. Elsewhere in the statement the company says net borrowings are in line with expectations.
In response to today's announcement stockbroker FinnCap, which maintains its 'buy' rating and 532p price target, cuts its earnings per share forecasts by 6.6% for the current financial year and 5% for August 2015. Analyst David Buxton comments: 'While the reduction to forecasts is disappointing, underlying trading is satisfactory. In mining, trading is still lower than a year ago, but some easing in Australia is now being seen. Improving general economic conditions are also assisting AEP.'
Stockbroker N+1 Singer is more cautious, remaining at 'hold' with a price target of 395p, and says: 'The lack of visibility in North American ECS is an unwelcome occurrence and creates some uncertainty as FY14 progresses.'