Full-year results from Fenner (FENR) trigger a positive response from the market, sending the industrial conveyor belt and reinforced polymer maker up 7.2% to 436.6p.


The numbers, which cover the 12 months to 31 August, are bolstered by a strong second half after difficult trading conditions in key markets – including the mining sector – hit first half trading.


Pre-tax profits are off 23.4% year-on-year at £67.9 million on revenues down 1.2% at £820.6 million but it is worth noting the scale of the second-half turnaround with first-half revenue only totalling £391.3 million and pre-tax profit coming in at £26.9 million.


Management are relatively bullish on the outlook – citing a 'generally improving global economic environment' and reiterating expectations of a 'return to growth' in the current financial year. Net cash from operations at £126.5 million represents 125% of underlying operating profit for the year and the Yorkshire-based firm increases the final dividend from 10.5p a share to 11.25p a share.


The company has two main divisions: Engineered Conveyor Solutions (ECS), which derives 74% of its revenues from the mining sector; and Advanced Engineered Products (AEP), which has a more diversified revenue base and produces advanced polymers, hydraulic seals and other engineered solutions. While revenue and operating profit from ECS declines, AEP sees an increase in both and produces its best ever performance.


In response to the numbers, stockbroker finnCap is minded to upgrade from 'hold' to 'buy' and increases its price target from 400p to 470p. Analyst David Buxton comments: 'The outlook statement is generally more upbeat than the market would be expecting in the wake of comments by Weir, for example. The shares have priced in a lacklustre performance and... there is some scope for a period of decent performance.'


Liberum Capital increases its price target from 410p to 515p and reiterates its 'buy' advice and N+1 Singer boosts its own price target from 363p to 395p, remaining at 'hold'.


Investec is less positive – reiterating its 'sell' advice – it comments: 'Although some of last year’s issues are easing, they have been replaced by a stiff headwind from the US and Australian currencies. We therefore expect reported progress this year to be limited.'

Issue Date: 13 Nov 2013