Annual General Meeting and Interim Management Statement
29/04/2010
Charter International plc is holding its 2010 Annual General Meeting at 2 p.m. today. At the meeting, Lars Emilson, the Company's Chairman, will make the following statement which incorporates the Company's Interim Management Statement for the period from 1 January to 28 April 2010.
I am pleased to report that, despite the very challenging economic and financial conditions which prevailed during 2009, the Company traded profitably throughout the year and generated increased operating cashflow. This was largely due to the strength of its businesses and the speed with which they were able to respond to the change in trading conditions.
In 2009, revenue was £1,659.2 million, compared with £1,887.0 million in 2008, a reduction of 12.1 per cent. Adjusted profit before tax was £126.0 million, compared with £213.2 million in 2008, a reduction of 41 per cent. Adjusted earnings per share were 55.0 pence, compared with 99.2 pence in 2008, a reduction of 45 per cent.
Our determination to continue investing in our businesses was illustrated by capital expenditure of £60 million during the year, compared with depreciation of £26 million, and total expenditure on research and development of £17 million, compared with £13 million in 2008.
Dividend
In recognition of the Company's robust performance during 2009, its strong balance sheet and our confidence that the Company will make further progress during 2010, the Board declared a second interim dividend of 14.5 pence per share. This makes a total for the year of 21.5 pence, compared with 21.0 pence per share which was paid in respect of 2008. The second interim dividend will be paid on 7 May 2010 to holders of ordinary shares registered on 16 April 2010.
Interim Management Statement for the period from 1 January to 28 April 2010
The results for the first quarter of the year were in line with the Board's expectations. Trading conditions for both ESAB and Howden improved in the latter half of the period under review.
If these recent improvements continue, then the Board would expect to see a further strengthening in ESAB's trading results and in Howden's order intake in the remainder of the year. On this basis, the Board views the outcome for the year as a whole with increasing confidence.
Business review
ESAB
ESAB's trading in January and February continued in line with the level experienced in the final quarter of 2009. Certain emerging markets, including India and South America, continued to trade well. However, recovery in Europe was held back by cold weather and trading in North America showed no signs of recovery.
ESAB's trading in March was significantly stronger. Emerging market strength continued. In Europe, improving weather combined with higher levels of industrial activity, whilst in North America, ESAB's markets showed signs of improvement.
Overall, ESAB's margin for the first quarter was just under 8 per cent. Russia was a significant contributor, with operating profit nearly 80 per cent up on last year. The recently created South African business is making good progress.
In consumables, volumes in January and February were slightly below those of the same period in the previous year, but in March were up nearly 14 per cent on those of March 2009, making it the strongest month for the business since 2008. This strength has continued into April and generally improving trends are expected over the coming months.
Prices have been largely maintained and price rises are being implemented in the light of rising steel prices.
Standard Equipment has shown signs of improvement. Automation had a quiet period but its prospects remain strong. The late-cycle Cutting business remains weak at present, but there are some grounds for expecting improvements in order intake and trading in the balance of the year.
As previously announced, ESAB is undertaking further restructuring of its European Cutting business and the European supply chain, which will lead to an exceptional charge for the year of about £15 million.
Overall levels of activity within ESAB's end-user markets have started to show signs of general improvement. Energy remains active, with ongoing investment in wind tower manufacturing, oil and gas and nuclear. Automotive markets are improving. However, there is weakness in shipbuilding which is expected to continue, and the previously anticipated number of larger projects in the energy and construction sectors has not yet materialised.
In the light of steel consumption forecasts and economic forward indicators, the Board expects ESAB to make further improvements in its trading as the year progresses. Whilst there is some uncertainty as to the rate and consistency of the recovery across different regions and end-user segments, ESAB has the flexibility and resources to meet expected increases in demand as and where they occur. ESAB believes that the restructuring measures which it undertook during the downturn will lead to permanent cost savings sufficient to improve its operating margin by 1 per cent.
Howden
Trading and bookings during the first quarter were slightly ahead of expectations, with positive trends in China and India in particular.
Revenue was slightly below the figure for the comparable period in 2009, reflecting the lower order book at the start of the year.
As anticipated, the increased enquiry levels for new equipment which were seen towards the end of 2009 led to an increase in the level of bookings in the year to date. As at 31 March 2010, the order book stood at £455 million, compared with £441 million at the start of the year, and gives good visibility for new equipment sales for the remainder of the year.
Howden's aftermarket business has continued to make further progress.
So far in 2010, continuing economic growth in China, India and other emerging markets has led to higher levels of enquiries from customers in the power industry in particular, although there is continuing uncertainty over how emissions control legislation will evolve in the USA.
Against this background, there is no change in our expectations for the outcome for the year as a whole.
Corporate development
In March 2010, Charter acquired AustCold Refrigeration Pty Ltd, a compressor company based in Sydney, Australia for A$5.6 million. AustCold designs, manufactures, supplies and commissions purpose built industrial refrigeration and gas compression packages, mainly for customers in the refrigeration, and oil, gas and petrochemical industries in Australia and South-East Asia. The acquisition has increased Howden's presence in these areas and is expected to increase sales of compressor packages and in the aftermarket.
Financial position
Charter has continued to maintain a strong balance sheet with net cash of £35 million at 31 March 2010.
The Board expects that the net cash position over the remainder of the financial year will reflect the rate at which levels of activity continue to recover and therefore lead to further investment in working capital, particularly in ESAB. The net cash position will also reflect the Company's continuing capital expenditure programme.
Conference call
Charter International plc will be hosting a conference call today at 1500 hours.
Dial-in details for the call and replay are set out below.
|
Participant Dial-in: PIN: |
+44 (0) 1452 561 371 71225006 |
| Replay details: | |
| International Dial in: | +44 (0) 1452 55 00 00 |
| UK Free Call Dial In: | 0800 953 1533 |
| UK Local Dial In: | 0845 245 5205 |
| USA Free Call Dial In: | 1866 247 4222 |
| Encore Replay Access Number: | 71225006# |
Contact
Andrew Fenwick; Sophie Brand, Brunswick +44 (0) 20 7404 5959
Michael Foster, Chief Executive; Robert Careless, Finance Director
Aidan Wallis, Head of Investor Relations +44 (0) 20 7404 5959
Internet users will be able to view this announcement, together with other information
about Charter International plc on the company's website http://www.charter.ie
Cautionary Statement
Certain sections of this statement may include forward looking statements that are subject to risk factors associated with, amongst other things, economic and business circumstances occurring from time to time in the countries in which the Company and its subsidiaries operate. It is believed that the expectations reflected in the statement are reasonable but they may be affected by a wide range of variables which are outside the control of the Company and could cause actual results to differ materially from those currently anticipated.