Fenner falls on sales deferrals, FX headwinds - UPDATE

11th Mar 2014 13:58

Fenner's share price fell sharply on Tuesday after the company failed to impress with an update on second-quarter trading, reiterating that results for the first half would be lower than the previous year.Results for the six months to February 28th, due out on April 23rd, will be below those last year's due to very strong trading in Australia the year before.While Fenner said that the full-year outcome "will show modest growth" on a constant currency basis, the strength of sterling during the period has also had an adverse impact on results.The company said that current exchange rates would have reduced last year's operating profit by £8.7m, although the movement in rates since the end of December has been only small.In the Engineered Conveyor Solutions (ECS) division, first-half results were lower than last year due to tough comparatives. The company added that sentiment among its coal mining customers remains "cautious, reflecting low commodity prices"."In the second half of the year, ECS's business is expected to see some benefit from higher levels of coal consumption and generally lower US coal stock piles, although the group remains mindful of the potential impact of corporate activity in North America and uncertainty in the Ukraine," the company said.Meanwhile, in Advanced Engineered Products (AEP), the performance was said to be "encouraging", particularly in the oil and gas industry. As previously indicated, AEP's first-half results will reflect certain customer sales that were deferred, along with increased investment. However, while Fenner expects these deferrals to be made up in the second half, it said that some could be pushed into the following financial year.Analyst David Buxton from finnCap said that the update "continued many of the themes of the group's previous [statement] in January, but notes a couple of points of caution". He cut its profit forecasts for the company and downgraded his rating on the stock from 'buy' to 'hold', saying that the shares are "fully up with events under current conditions with a mixed outlook continuing".Analysts at both Investec and Numis Securities also reduced their earnings estimates for Fenner on Tuesday.The stock was trading 5.4% lower at 422p by 13:29.BC