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Edison today!
The firm was keen to stress that its results for the current financial year (ending March 31st) will demonstrate substantial year-on-year improvement, due to "excellent" progress at Foils Americas, Foils Europe and Laminates. However, it admitted the outlook for both Holographics and Laminates is now "less than favourable", saying that within the latter the favourable impact on volumes for next year will be mitigated by some recent losses on other supply positions. "The board remains confident that the group will make further progress in the year ahead," it said.
Shares in API Group tumbled on Wednesday after the company reported that its full year results are likely to be marginally below previous management expectations, which came as a double blow as the group announced has opted not to go ahead with the anticipated sale of the company. The drop in full year results is primarily a result of a continued weak performance in the Holographics division. The company revealed it had concluded that a sale of the group at this time as it is "unlikely to gain sufficient recognition for the underlying value of the business or to deliver best value for shareholders", and as a result, it has "decided to terminate the formal sale process with immediate effect". In a statement API said: "The board remains focused on maximising shareholder value and committed to maintaining an open dialogue with shareholders about how best that can be achieved."
API Group: Numis shifts target price from 70p to 67p downgrading to hold.
Specialist packaging company API Group has issued a trading update relating to its formal sale process, addressing recent share price movement. The company said that interested parties had been provided with access to management and due diligence information about API, but it acknowledged that to date indicative proposals had been below the closing mid-market price of API shares of 90p. A statement from the company read: "The board wishes to emphasize that there can be no certainty that any formal offer will be made for the company, or even proposed, or as to the level of any proposal or offer that may be made." "The board reserves the right to alter any aspect of the formal sale process or to terminate it at any time and in such cases will make an announcement as appropriate. The board also reserves the right to reject any approach or terminate discussions with any interested party or participant at any time."
Nice quiet page here, i've been adding last couple of days.
Looking ahead, Turner added: "Despite challenging economic conditions, the board's expectations for the full year remain substantially unchanged, with management's primary focus on the conversion of a number of specific sales opportunities, as well as the successful execution of key capital expenditure projects designed to enhance our product and service offering to customers."
At divisional level, three of the group's four business units contributed higher profits. Laminates performed particularly strongly, with operating profits ahead by £1.3m despite delays in the start-up of its major new supply contract. Both Foils businesses made encouraging progress, with Americas profits higher by £0.3m and Europe by £0.4m. As expected, volumes at Holographics suffered from the completion of a large joint project with Laminates. Shipments to third party customers were also lower, leading to a reversal in operating profits at that division of £0.9m. Net financing costs at the interim stage were £0.9m, unchanged on the same period last year. Cash interest costs were lower by 13%, offset by higher pension running costs. Operating profits before exceptional items reached £5.0m; a margin on sales of 8.5%, an increase of £1.2m (+33%) over the first half of last year and a £1.9m improvement on the preceding six months. Earlier this year the company announced that it had begun a formal sale process of the group and on Thursday confirmed that "a number of indicative offers have been received". API had no further comment to make on the situation.
Specialist foils and packaging materials maker API Group has posted a 29 per cent increase in pre-tax profit (PTP), driven by operating profits in the six months ended Sptember 30th. PTP totalled £3.7m (2011: £2.9m), while operating profits came in at £4.6m (2011: £3.8m). Revenue proved to be less impressive, however, marginally higher at £58.8m, compared to £58.5m the same period the previous year. The cost of sales was also lower, by £1.0m, resulting in gross profit of £15.1m (2011: £13.8m). The company's directors were happy with its position, not least given the period of recovery it has been in for the past five years, saying that while growth in the period was modest compared to the last two years, "it is encouraging that underlying demand for API products remains robust". In an interview with Sharecast and Digital Look, Chief Executive, Andrew Turner added: "Although one or two things have not necessarily gone to plan, we feel pretty positive about where the company is at this time". The group suffered when raw material prices rocketed in early 2011, but said costs have now recovered and as a result added value margins improved across the business to the levels immediately prior to the rise.
The company said: "A capital investment programme is underway to strengthen Holographics' offer to the growing security and authentication market." API commenced a formal sales process in September after the board decided earlier in the year that it would consider exploring a sale in the third quarter. "Having consulted with its advisers and given the matter careful consideration, the board has now concluded that such a step would serve shareholder interests and is therefore seeking potential offerors for the company, initiating a formal sale process and putting the company into an offer period with immediate effect," the firm said on September 26th.
Specialist foils and packaging materials maker API Group has reassured that interim results will be in line with expectations after an 'encouraging' trading performance in the first six months of the year. However, the company did not that it was cautious on demand levels in European markets and that its view was "in common with many other companies". However, it said that the outlook for the rest of the year remains positive given specific sales opportunities and improvement initiatives. Margins in the first half have continued to recover from the raw material cost pressures seen last year and sales are expected to up year-on-year. The Laminates division is performing ahead of plan, while Foils Americas and Foils Europe have held on to their profit improvement momentum due to better margins and lower costs, the group said. However, some weakness has been identified in the Holographics unit with results expected to be lower due to the completion of a significant joint project with Laminates, as well as a slowdown in order from external customers.
Clearly, there is room for substantial upside once the sale process hots up. In the meantime, the business is on a sound footing and the shares, rated on just six times broker Numis's forecast earnings, fail to reflect forecast earnings growth of 39 per cent this year But as always dyor gl...........
Of course, there are risks. Unlikely as it is, API could go unsold, or struggle to attract a decent price. Making a big chunk of group profits from the tobacco industry carries dangers, too, given the threat of a ban on branded cigarette packaging.
Bid prospects aren't the only reason to own API's shares, though. Improving margins meant this year's profit topped £5m and, because accumulated tax losses in the UK and US mean it currently pays hardly any tax. EPS almost doubled. As usual, supplying laminate packaging for upmarket cosmetics brands, cigarette packets and booze made most of the money - about £5.7m of operating profit in all. And increasing demand for security features on clothes tags and ID cards meant profit at the holographic division tripled to £1.6m. It was tougher at the lower-margin foils unit. Sales there were little changed both in Europe and the US and, while cost-cutting helped profits in the Americas, higher overheads and weak volumes halved income this side of the Atlantic.
API (API) ORD PRICE: 55.8p MARKET VALUE: £42.8m TOUCH: 55.5-56p 12-MONTH: 68.5p LOW: 27.8p DIVIDEND YIELD: nil PE RATIO: 6 NET ASSET VALUE: 28p NET DEBT: 17% Year to 31 Mar Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p) 2009 87.4 -0.25 -1.7 nil 2010 79.2 -0.34 3.4 nil 2011 100 2.86 3.5 nil 2012 114 5.06 6.7 nil 2013* 122 7.60 9.3 nil % change +7 +50 +39 -
That might reignite interest from Illinois Tool Works. It tried buying the heavily loss-making API in 2005 for about £70m, equivalent to roughly 100p a share today according to analysts, but Steel Partners wanted more. Moreover, API is thought to have grabbed the attention of potential suitors in Germany and the Middle East and could create a stir among foil makers in Asia, too.
API is only on the market because Steel Partners, the US activist fund and 32 per cent shareholder, has just listed on the New York Stock Exchange and its plans don't include API. They and Wynnefield Capital, with a near-30 per cent stake, demanded back in February that API seek a buyer. Mr Turner agreed to start looking once shipments for a lucrative five-year laminates contract had begun at the end of June. Understood to be with a tobacco major, it could generate £10m of sales this year and twice that the year after.
That API has made such progress has much to do with chief executive Andrew Turner. The business was haemorrhaging cash and was deep in debt when he took over in October 2007 yet, within four months, it had raised £8m, begun slashing costs, got the bank onside and switched its listing to the Alternative Investment Market (Aim). Now supplying the big tobacco companies, drinks giant Diageo and drugs major GlaxoSmithKline, API is profitable and has generated over £8m of cash from operations for two years' running. It should be debt-free in 2013 and, after weathering a period of high raw material costs, prices are falling and margins are bound to improve.
Like the Queen, API has been with us since the 1950s. However, unlike Her Majesty, the packaging material group's reign may soon be over. Under pressure from major shareholders, the business is effectively up for sale but, given that it’s now in the "healthiest group financial position for at least a decade," according to chairman Richard Wright, any buyer will be forced to pay a big premium.
No dividend payment has been recommended.
As the group looks ahead, it added: "The Board remains cautiously optimistic about prospects for the new financial year. The general economic climate and uncertainty surrounding the euro continues to impact consumer confidence and economic growth in the regions and markets served by API. However, end markets for premium products which drive a significant proportion of sales have so far proved relatively resilient."
Laminates remained the biggest contributor to the full year results. Holographics performed particularly well following growth in target security markets. Foils Americas benefited from an improved sales mix and lower costs. Foils Europe profits fell £0.5m as recovering margins were offset by weaker volumes, especially in the second half. API expects results to benefit from the increased focus brought by the recent establishment of separate management teams for Foils Europe and Holographics, the group explained.
Chairman Richard Wright said was pleased with the results, in spite of the challenging economic conditions and pressures from higher raw material costs. "A second year of strong cash flow has transformed the Group's balance sheet. With a robust pipeline of growth projects and management focus on improving the profitability of the European foils business, the Board is confident of making further progress in the current financial year," he said.
Shares of specialist foils and packaging materials group API shot ahead as it unveiled a massive rise in annual profit and said it is confident of further progress for the remainder of 2012. Pre-tax profit jumped by 77% to £5.1m for the year ended 31 March 2012 while revenues grew 14% to £113.9m. Operating profits for the period advanced by 32% to £6.9m.
Shares of specialist foils and packaging materials group API shot ahead as it unveiled a massive rise in annual profit and a substantially strengthened balance sheet. Pre-tax profit jumped by 77% to £5.1m for the year ended 31 March 2012 while revenues grew 14% to £113.9m. Operating profits for the period advanced by 32% to £6.9m. Chairman Richard Wright said he was pleased with the results, in spite of the challenging economic conditions and pressures from higher raw material costs. "A second year of strong cash flow has transformed the group's balance sheet. With a robust pipeline of growth projects and management focus on improving the profitability of the European foils business, the board is confident of making further progress in the current financial year," he said. Laminates remained the biggest contributor to the full year results, and "cemented a cracking year the year before," Finance Director Chris Smith said. Holographics performed particularly well following growth in target security markets. Foils Americas benefited from an improved sales mix and lower costs.