Strong order book growth during July and August at construction products specialist Alumasc (ALU) means the company is well placed at the start of its new financial year, says chief executive Paul Hooper.
Results for the year to 30 June 2016 show revenue gained 2% to £92.2 million and operating profit roughly flat at £7.6 million. Underlying earnings per share increased 9% to 18.4p.
Alumasc’s order book, an indicator of future workload, increased 11% to £26.6 million and Hooper says further orders received in July and August increased the backlog to above £30 million.
Prospects in Alumasc’s US business are particularly good, Hooper said in a call with Shares, with some of the company’s customers in the country reporting 18 months visibility over future workload.
Alumasc’s US operations are run through its Levolux brand, a business it bought in 2007 for £13.5 million. Solar shading specialist Levolux provides products which range from internal blinds to large scale external solar screens for major construction projects.
‘Order book growth has been across all segments and the greatest growth has been in solar shading,’ says Hooper.
‘We don’t have an order book for our housebuilding products business but the lead times are around six to nine months in solar shading. One-third of that order book is in the US and it’s really exciting to see that market develop.’
Levolux sells its products into the US but does not provide installation services there, as it does in the UK. Chief financial officer Andrew Magson said around £1 million would be invested across the business to appoint more sales staff, with half of that allocated to the US.
Other investment opportunities for the business include the potential for small, bolt-on acquisitions, Hooper said.
‘Right now we see our growth opportunities as principally organic,’ said Hooper.
‘We have talented people in place, are developing new products across the business. We will consider bolt-on acquisitions if there are good synergies and potentially to bring in new products but we are not going out to acquire anything in a major way because we see good prospects for organic growth.’
While prospects for Alumasc’s solar shading business look good, it makes 90% of its profit in other areas including roofing and walling, water management and housebuilding products.
Hooper added the sale of Alumasc’s last remaining engineering unit in July means the business is now squarely focused on its key building products niche.
‘With the sale of Dyson and the other engineering division the business has really undergone a transformation into a highly focused building products specialist with good growth potential, strong market share and with plenty of opportunity in new products and services,’ said Hooper.
Earnings per share forecasts for the year to 30 June 2017 were upgraded by house broker Finncap from 17.9p to 20p. Hooper warned larger projects in Alumasc’s order book indicate most of its improvement in performance will occur in the latter half of its financial year.
Shares in Alumasc trade 6% higher at 174p, valuing the business at £63 million.