Diploma stockpiling ahead of Brexit; FY profits up 9%

19th Nov 2018 07:40

(Sharecast News) - Industrial seals maker Diploma said it was building up stocks to cope with any disruptions caused by Brexit as it reported a 9% rise in full year pre-tax profits.As Prime Minister Theresa May fights to push through a Brexit deal against the backdrop of a potential coup against her, Diploma said a "prolonged disruption at the UK's borders has the potential to impact the supply chain"."However the businesses have begun to build inventory levels of their faster moving product lines," Diploma said."The group's financial results may be impacted by macro-economic instability arising from a delayed or disruptive exit from the European Union, such as a depressed UK economy or a substantial depreciation in UK sterling."It added that in this scenario "there may be a reduction in the group's UK revenues and operating profits" although net assets would benefit from a translation into sterling."It is also likely that a depreciation in UK sterling would lead to stronger inflation in supplier costs for the group's UK based businesses, which would need to be managed robustly to maintain gross margins," the company said.Britain makes up 26% of the group revenue. Diploma said any Brexit impact would not hit profits severely.Revenues increased by 7% to £485.1m, while pre-tax profits rose to £72.7m from £66.8m. There was a forex headwind that cut revenues by 3%, Diploma said.The total dividend was increased by 11% to 25.5p a share.