City round-up: James Cropper; Speedy; BAE Systems

Cumbrian paper group, James Cropper, has slipped into a half year loss, but is confident of a return to profitability in the second half of its financial year.

The Kendal-based group warned in October that it faced a multimillion-pound impact from rising energy prices that would hit its half-year results.

Today, the company published its figures for the six months to September 24, 2022, that showed an increase in revenues, from £50m to £61.6m, and a pre-tax loss of £800,000, compared with a £1.9m pre-tax profit the previous year.

The interim dividend has been reduced from 2.5p per share a year ago, to 2p per share.

Net borrowings stood at £12.2m, up from the £9.6m level in 2021.

Cropper said its increased revenues were driven by new customer wins and existing client growth and that demand remains strong, with revenue growth across each of its three divisions.

It also announced that expectations for fiscal year 2023 have been reduced with an adjusted pre-tax profit of £2m against previous market expectations of £5.4m, as announced on October 31, 2022.

Chairman, Mark Cropper, said: “While short term profitability has been impacted, the decisive actions taken combined with the ongoing investments across the group has strengthened our long term growth prospects and we fully expect to return to profitability in the next six months.

“This company is built on a strong heritage of innovation and a relentless focus on quality, which places us in a very strong position as we evolve and create a sustainable future.”

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Speedy electric vehicle

Speedy Hire is optimistic for further growth as half year revenues climbed by nearly 14%.

The group, which hailed a strong performance in its re-hire business and increased revenue from fuel and energy sales, revealed turnover from continuing operations grew to £212.4m for the six months to 30 September 2022.

Adjusted pre-tax profits shrank slightly to £14.1m. That was down 3.4% from last year’s £14.6m.

EBITDA was also down by 1.6% to £48.3m.

New CEO Dan Evans described the half year results as ‘resilient,’ adding revenue growth remained strong, with increased strategic investment in growth initiatives including Retail and Trade, marketing and ESG.

He said: “Revenue growth is continuing with new contract wins, the effect of actions taken on price and a healthy pipeline of customer activity which gives confidence for further growth in the second half.

“Whilst the macroeconomic outlook is uncertain and inflationary pressures remain high, I take over as Chief Executive at a time when our business is performing well, is resilient and positioned to manage changes in market conditions.

“We remain confident of delivering results in line with the Board’s expectation for the full year.”

The company has proposed an interim dividend of 0.80 pence per share.

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BAE Systems

Defence group, BAE Systems, revealed an improved outlook in a trading update today, driven by the deteriorating global security picture as countries around the world plan increases in their defence budgets.

The group boasted a continuing strong order intake, with a further £10bn secured in the second half to date. It said it has had a good operational performance in challenging conditions, and has increased investment in R&D, people and facilities to support future growth.

BAE has a strong balance sheet that supports capital allocation flexibility.

Underlying group guidance for fiscal year 2022 is confirmed and it has a large and predominantly long cycle orderbook, diverse portfolio and focus on programme performance which gives line of sight for future growth and margin expansion.

Chief executive, Charles Woodburn, said: “Our operational performance year to date underlines our confidence in the full year group guidance for top line growth and margin expansion as well as our cash flow targets.

“Order flow remains strong and our focus on programme execution, cash generation and efficiencies is helping us to navigate the challenging operating environment.

“Looking forward, our large order backlog, diverse portfolio position and focus on programme performance position us well for another year of top line growth and margin expansion in 2023. We see sales growth coming from all sectors and opportunities to further enhance the medium term outlook as our customers address the elevated threat environment.”

The group operates factories in Warton and Salmesbury, near Preston, building military aircraft, and a submarine building facility in Barrow. It employs around 15,000 staff in Lancashire and Cumbria.

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “The company might not scream it from the rooftops but a more turbulent global picture for geopolitics and security is good news for defence outfit BAE Systems.

“Its latest trading update underlines how a more turbulent world benefits BAE, with the company seeing robust defence spending in many of its markets as war continues to rage in Ukraine.

“Countries are making long term commitments to upgrade their military capability and capacity and that brings with it long term growth potential for BAE. This is reflected in a rapidly expanding order book.

“Critically, BAE is investing in technology and its own capacity to position itself to take advantage of the opportunities.”

He added: “Like most big manufacturing businesses, BAE continues to face supply chain issues, though it is notable that management is now more relaxed about a tight labour market. BAE also seems to have done a decent job of managing energy costs.

“The UK remains an important market for BAE and investors will, therefore, be watching the Autumn Statement on the 17 November to see if the UK Government will cut back on defence as it looks to balance the books.”