UPDATE: Brammer Upgrades Dividend, Sees Fiscal Year Profit At 2008 Level
August 06 2010 - 4:55AM
Dow Jones News
Mechanical parts supplier Brammer PLC (BRAM.LN) Friday increased
its dividend 14% after reporting a return to profit in the first
half of 2010, as it benefited from an uptick in manufacturing
output and market share gains.
Brammer Chief Executive Ian Fraser told Dow Jones Newswires the
company, which supplies parts like bearings and gear boxes to
dozens of industries, expects full-year profit to return to 2008
levels provided the current benign trading environment
continues.
Fraser said Brammer requires only that manufacturing activity
remains broadly steady to keep increasing sales at a higher rate
than the growth of the overall market. Brammer also expects to keep
gaining market share, Fraser said. It currently estimates it has
just 3%.
Brammer, which counts Associated British Foods PLC (ABF.LN),
Coca-Cola Co. (KO) and Severn Trent PLC (SVT.LN) among its
customers, Friday reported a pretax profit of GBP9 million,
compared with a pretax loss of GBP2.6 million in the same period a
year earlier.
Revenue increased 6.3% to GBP230 million from GBP216.3 million
and net debt fell to GBP40.2 million from GBP69.4 million. It
raised its interim dividend to 2.1 pence a share from 1.84 pence a
year earlier.
Brammer said earnings benefited from seven new key
accounts--broad supply deals with large national or pan-European
customers--and new "insites," where the company manages a
customer's inventory at its factories.
The food and beverages industry has now overtaken car makers as
Brammer's biggest sector, said Fraser.
Brokerage KBC Peel Hunt said Brammer's first-half trading was in
line with expectations. It rates the stock "buy."
At 0819 GMT, shares in Brammer were flat at 159 pence,
underperforming a 0.3% higher Dow Jones U.K. Smaller Companies
index. The stock has gained 33% since the start of the year.
Brammer, which raised GBP35 million in a rights issue at the end
of 2009, is working with a German technology institute to research
ways companies can save energy, said Fraser. It intends to advise
its customers how to reduce their energy bills, and save money, by
tweaking their manufacturing processes. This will help Brammer win
new business, he said.
-By Rachael Gormley and Jason Douglas, Dow Jones Newswires;
44-20-7842-9272; jason.douglas@dowjones.com
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