The market will be disappointed at the start of Tyman's (TYMN) new life as a main board company, having moved from Aim in July. Yet it seems profit taking is to blame for Tyman's (TYMN) 3.6% fall to 217p today upon publication of the construction materials group's interim results.
The numbers aren't too bad. Revenues at the £396 million cap are up 10.6% to £123.7 million in the six months to 31 June, with underlying profit in the period printing a 12.5% increase to £10.9 million.
A strong US performance and an ongoing recovery in UK markets are key to this robust performance. The new build market in the US continued to improve and Amesbury – Tyman's North American Building Products division – saw a 5% increase in operating profit from £6 million to £6.3 million on sales up 6% on a like-for-like basis. The order book was up 16% and Micheal O'Brien at Canaccord Genuity believes this has continued to build since the half-year end.
The group acknowledges the Renovation Maintenance Improvement (RMI) segment of the US market – which accounts for 70% of North American revenues – continues to lag the improving new build market but chief executive Louis Eperjesi tells Shares that a lag of 18 months to two years between a pick up in new build up and an improvement in RMI is typical.
The UK, where RMI accounts for 95% of revenues, saw Grouphomesafe continue its positive momentum into the second half with further growth in revenue and operating profit as a result of new customer wins, new product introductions, and further growth in the group's Fab & Fix door and window hardware.
European headwinds remain problematic but at least conditions are unlikely to significantly worsen in a region that accounts for around 15% of total group revenues.
Beyond Europe and the US, both Brazil and Australia have performed strongly but currency weakness both at home and in those destination markets has impacted the cost of imported finished goods.
The July acquisitions of Truth Hardware for a net cash consideration of approximately $200 million was financed by an equity issue which raised gross proceeds of £73.4 million and left the group with underlying net cash balance of £25.2 million.
The Truth deal is expected to deliver £5 million in synergies with chief executive Eperjesi describing the deal as a strong strategic fit. Truth turned over $126 million in 2012 and generated profits of $19 million. Tyman expects the deal to add a similar figure to North American profits by full year 2014.
Despite anticipating a stronger performance from all business units in 2014 (with material opportunity in the US), Canaccord's O'Brien points out that the shares are up by over 20% from the recent fundraising price and may pause for breath. To that end he gives Tyman a 'hold' recommendation with a target of 225p.