Charter boosted by Swedish purchase
THE INVESTMENT COLUMN
But what really transformed Charter's image was last year's pounds 295m acquisition of Esab, the Swedish group that dominates the world market for welding supplies. Since the middle of 1994, when the intention to add another leg to the business was announced, the British group's shares have outperformed the market by over a fifth.
The reasons for the market's enthusiasm were clear in yesterday's interim figures. The first full period of Esab has raised pre-tax profits from pounds 20.3m to pounds 50.3m in the six months to June, with earnings per share more than doubled to 35.4p. The dividend is increased by 1p to 8.5p.
After having Esab for barely a year, Charter is on a roll. Margins at the acquired business have jumped from below 7 per cent to just under 11 - well ahead of Charter's target of achieving 10 per cent across the cycle. Meanwhile, gearing has tumbled from 91 per cent to 29 per cent, helped on its way by the sale of the coal equipment and aggregates businesses and the final proceeds from the JM stake.
Fresh from his triumph with welding supplies, chief executive Jeffrey Herbert is now ready to repeat the success elsewhere. Over the next year or so, Charter is ready to add a fourth leg, valued at anywhere between pounds 200m and pounds 400m, which would take the group into another international and industrial area of the world market. Given his current star rating with the City, Mr Herbert has chosen his moment well, although he will find it progressively harder to keep up this level of momentum.
While the influence of new owners helped, Esab's first-half margin performance owed most to strong markets. Highly geared to economic recovery in Europe, which accounts for 55 per cent of the business, Esab got a significant boost from a 21 per cent rise in sales there. The economic rebound in Brazil also helped, pushing local sales up a quarter, but the economy there is now slowing.
Full-year profits of pounds 103m from Charter would put the shares, down 15p at 917p, on a forward rating of around 13. That looks high enough while management proves the Esab deal was no fluke.
- 1 Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
- 2 Rihanna 'nude pictures' claims emerge on 4Chan as hacking scandal continues
- 3 Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
- 4 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Rihanna 'nude pictures' claims emerge on 4Chan as hacking scandal continues
Kim Kardashian 'nude photos' leaked on 4chan weeks after Jennifer Lawrence scandal
'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
Jennifer Lawrence: Leaked 4Chan sex video branded 'fake' by users
Jennifer Lawrence 'naked sex video' will be leaked next, threatens 4Chan celebrity photo hacker
Scotland could still declare independence – even without referendum, says Alex Salmond
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
Archbishop of Canterbury admits doubts about existence of God
iJobs Money & Business
£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...
£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...