View from City Road: Triplex Lloyd looks dented

Click to follow
The Independent Online
TRIPLEX LLOYD should be well placed to take advantage of recovery, having survived recession and being exposed to an upturn in capital spending. It is a well-run company, investing confidently in its businesses and doing its best to carve niche markets for its products. Despite all this, it is very hard to be optimistic about any company so dependent on heavy industry.

Interim results showed a small increase in pre-tax profits from pounds 3.1m to pounds 3.3m. Trading profits (which do not include lumpy contributions from property) were pounds 4.7m, up pounds 700,000. The interim dividend was unchanged at 2.5p.

The increases owe much to Triplex's strength in supplying turbine blades to new gas-fired powered stations. But behind the headline figures lie a building materials division that is going nowhere and an automotive component maker that on Triplex's own admission has weaker order books.

Profits from the power business advanced by nearly a quarter to pounds 2m in the half year. Power will underpin Triplex's profits for some years to come because enthusiasm for gas-fired power stations - notwithstanding the coal debate - continues unabated in this country and overseas. The company's defensive qualities are also enhanced by exports. Overseas sales accounted for 54 per cent of total turnover of pounds 81m in the six months to 30 September.

Shares in Triplex have reflected its inherent strength by outperforming other quoted metal bashers during the last five years. But the sector as a whole has lagged behind the rest of the market. Even if it pulls a large and workable acquisition out of the bag, investors may prefer to buy an earlier beneficiary of the upturn.