Flowtech Fluidpower Plc (LON:FLO), today announced the following unaudited update on its performance for the year ended 31 December 2018 and to the period up to this announcement:
GROUP TRADING UPDATE AND FINANCIALS
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Revenue for the year ended 31 December 2018 |
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|
Divisions: |
2018 Unaudited £m |
2017 Audited £m |
Growth
|
|
Flowtechnology |
45.2 |
37.2 |
22% |
|
Power Motion Control (PMC) |
57.6 |
34.8 |
66% |
|
Process |
8.3 |
6.3 |
32% |
|
Total Group revenue for the period |
111.1 |
78.3 |
42% |
|
Net debt |
19.9 |
14.9 |
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Group revenue for the year ended 31 December 2018 increased by c.42% over 2017. After removing the effects of acquisitions, organic sales growth in the year was c.6%. Divisional gross margins again remain in line with prior periods. The Board expects underlying* profit before tax for the year ended 31 December 2018 to be in the range of £10.6m to £10.8m.
Strong sales in Q4 resulted in increased debtor levels whilst collection periods were held at c.75 days. Market conditions generally across Europe remain positive, resulting in increased supplier lead times. This, combined with our high service offer and some sector nervousness around post Brexit supply chains, has resulted in stock levels being above long-term averages. Consequently, net debt at £19.9m is above market expectations. We continue to monitor stock levels carefully and will take appropriate action as the Brexit scenario unfolds.
PEOPLE
Following the appointment of Russell Cash as CFO on 1 November 2018, the Board made a further change to the leadership team at Executive Board level. Nick Fossey, who joined the business in March 2016 from the Group’s largest supplier, Eaton Corporation, was appointed as Chief Operating Officer for the Group in December.
ACQUISITIONS
We are pleased to report that Beaumanor Fluidpower and Derek Lane, the two profit centres acquired as part of the Balu transaction in March 2018, have performed in line with management expectations and have added significantly to the skill base of the Group.
DIVIDEND
The Board remains confident in the Group’s performance and outlook and, it intends to propose a final dividend which will once again deliver 5% growth over 2017.
OUTLOOK
Within the fluid power market sentiment generally remains positive, and this is reflected in the order book for our PMC division businesses which provides some insight on Q1 2019. The Board is therefore expecting a solid start to 2019 on which we will report in April. Beyond that our sector shares the general unease with the potential effects of Brexit, although with a strong element of Group revenues generated from repair and maintenance, and refurbishment programmes, coupled with a widely spread sector base of OEM customers, the Board believes the Group has developed a sensible defensive position.
Further progress has been made regarding the Thames Tideway project with work now likely to take place over a three-year period.
SUMMARY
The new Executive Management team is fully focussed on extracting synergies and creating a strong platform for future organic and acquisitive growth. Therefore, the Board remains confident in both the strategy and long-term outlook for the Group.
NOTICE OF RESULTS
The Company will update shareholders further on the Group’s performance for Q1 2019 and the prospects for the remainder of the year at the time of the announcement of the 2018 results, scheduled to be released on Tuesday, 16 April 2019.
