Industrial parts distributor Trifast (TRI) flags potential weakness in its UK business but decent growth prospects elsewhere in a half-year results statement.
In the UK, where Trifast generates around a quarter of its revenue, executive chairman Malcolm Diamond says the business is already experiencing pricing pressure after sterling's depreciation against most major currencies.
Business conditions are stronger in Europe and elsewhere, Diamond adds.
| EARNINGS ESTIMATES | |||
| Trifast - Key metrics (£m) | |||
| 2016 | 2017e | 2018e | |
| Revenue | 161.4 | 183.0 | 179.9 |
| Adj. EBITDA | 18.2 | 20.9 | 21.6 |
| Adj. profit-before-tax | 16.0 | 18.5 | 19.0 |
| Adj. earnings per share | 10.0p | 11.6p | 11.5p |
| Dividend per share | 2.8p | 3.1p | 3.4p |
| Source: N+1 Singer (Year-end: 31 Mar) | |||
‘The group’s focus on growing its share of business with multinational original equipment manufacturers (OEM) helped drive good organic sales growth of 4.5%, ahead of most industrial peers,’ writes analyst Jo Reedman at house broker N+1 Singer.
‘This was boosted to circa 15% sales growth by a six month contribution from last year’s acquisition and a foreign exchange tailwind which also delivered a 30 basis point increase in adjusted operating margin to 11.4%.'
‘We have increased our profit-before-tax forecasts by 5% for 2017 and by 7% for 2018 and raised our target price from 170p to 190p,’ the analyst says.
Alongside the trading update Trifast veteran Malcolm Diamond, whose second spell at the company started in 2009, updated on management succession plans. Diamond will switch from an executive chairman role to a non-executive position while current chief executive Mark Belton and finance officer Clare Foster will step up to take on more executive responsibilities.
