Concrete levelling specialist Somero Enterprises (SOM:AIM) delivers an upbeat trading update, beating earnings and sales expectations in the year to 31 December 2018.
Surging volumes and tightly controlled costs have helped earnings before interest, tax, depreciation and amortisation (EBITDA) beat market expectations of $29m, while sales are expected to come in ahead of a previously stated five-year plan objective of $90m.
And that’s not even the last of the positive news as the company has also acquired hose dragging equipment specialist Line Dragon for $2m in cash.
The deal is expected to boost Somero’s product range, attract more customers and offer a small uplift on earnings this year.
Somero rallied 16% to 340p on today’s news, building on a strong run over the last five years which has seen a 171.5% advance in the shares.
Over the latter half of 2018, the company enjoyed a significant boost from a raft of construction projects in North America and upbeat trading in Australia, Scandinavia and India.
Finncap analyst David Buxton has upgraded 2018 sales forecasts by 4.2% to $93.8m, lifting EBITDA to an estimated $30.4m in 2018.
Further upgrades have been pencilled in for 2019 in with sales estimates upped 4.8% to $98.5m.
These upgrades have had a knock-on impact on earnings per share, with forecasts for 2018 increased by 4.9% to 39.6c and for 2019 by 4.6% to 41.9c.
Buxton notes the company’s strong cash position, commenting: ‘Net cash is anticipated to be more significantly ahead of market expectations of $25m, supporting a strong increase in dividends, with a regular dividend of 50% of adjusted net income, plus a supplemental dividend of 50% of the excess cash over $15m.’