LONDON (Alliance News) - Tex Holdings PLC Monday reported a 42% increase in first-half pretax profit, as a better gross profit margin more than offset a fall in revenue.
In a statement, Tex said it made a GBP459,000 pretax profit in the six months ended June 30, compared with GBP324,000 in the corresponding period last year. Revenue fell to GBP17.7 million from GBP19.4 million, but cost of sales fell to GBP11.4 million from GBP13.4 million. Selling and marketing costs increased by just GBP15,000 to GBP435,000, while administrative expenses rose to GBP5.3 million from GBP5.2 million.
Chairman Anthony Richard Brocas Burrows said that the potential shortfall in profit due to the revenue fall was "recovered as a result of the absence of further significant costs on the Muscat [control room] project and the rental income from the 40 tonne hammer."
Tex's 2013 results, for which the group reported a fall to a GBP744,000 pretax profit from GBP1.1 million in 2012, were hurt by an exceptional loss on the contract for an air traffic control room at Muscat Airport.
Tex's BSP International Foundations manufactures piling hammers and related equipment.
"With the exception of the boards and panels division, all divisions saw a decrease in sales compared to the first six months of 2013," Burrows said in a statement. He said that profit in the plastics division has improved due to mix of work.
"Engineering was a mixed picture with BSP trading strongly on the back of the rental and sale of the 40 tonne hammer, this being offset by the underperformance of the balance of the division as a result of, in the case of Eurotex, delayed contracts, and in Tex Engineering, lower than anticipated margins," Burrows said.
"An exercise to review the margins within Tex Engineering has been undertaken and it is anticipated that this subsidiary should recover to a breakeven position. The boards and panels division continues to improve on a further modest increase in sales," he added.
Meanwhile Burrows said that Tex's current order book is down on last year, but said that enquiries are at the prior year's level and the "rate of conversion is consistent with previous years."
"[It] is the time-period from quote to order that is extending as the markets remain nervous," Burrows noted. "This, along with the current political turmoil in the world and the continued strengthening of sterling, tempers any optimism that the board could draw from the first half results. The current indications are for the full year trading to be consistent with recent full year results," he added.
The Chairman said that the board is "mindful" of the impact a significant drop in the FTSE would have on Tex's pension scheme deficit and therefore the group balance sheet.
"Cash and cost control remain a corporate priority," Burrows said.
Tex increased its interim dividend to 2.0 pence from 1.5 pence.
Shares were Monday quoted up 1.3% at 87.58p.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
Copyright 2014 Alliance News Limited. All Rights Reserved.
