Alumasc registers rise in profits, but pensions deficit increases

4th Feb 2014 14:26

Self-described supplier of sustainable building products Alumasc saw an 11 per cent rise in underlying interim profits, but at the same time as its pensions deficit balloned as a result of falling yields on Gilts. Sales fell by 4%, to reach £57.2m, in the six months ending on December 31st 2013. Recurring revenues, however, increased by 5% during the period.Along with an improvement in overall margins the above drove an 11% rise in underlying profits before tax to £3m. The company, nevertheless, has yet to see any marked improvement for building products outside the house building sector, notwithstanding growing optimism in that respect, management said.Demand for engineering products, on the other hand, recovered to levels similar to those seen prior to the de-stocking of last winter. Average net debt in the period was the lowest since 2007.The main change in the group balance sheet was the increase in the IAS19 pension deficit to £15.5m versus £10.1m as of June 30th 2013, "mainly due to a reduction in long term AA corporate bond yields used to discount pension liabilities to present values". Cash from operations fell 58% year-over-year to £2.2m as result of increased inventories (£1.04m) and movements in retirement benefit obligations (£1.234m). As regards the outlook, the group expects to achieve its previous expectations for full year performance. The company will increase its interim dividend by 10% to 2.2p. Reacting to the numbers analysts at Finncap said the shares currently look good value on a price-to-earnings multiple of 10 and increasing yield. For that reason they opted to retain their 'Buy' rating on the stock.Shares of the company ended the day falling by 5.26% to 135p.AB