Brammer battered as sales growth slows

A slow down in revenue growth in May and June knocked industrial engineering products distributor Brammer for six on Tuesday morning.

Pre-tax profit leapt 19.6% to £17.1m in the first half of 2012 (2011: £14.3m) on record revenues of £331.1m, 20.3% higher than the £275.2m achieved the previous year.

Although on the face of it a 20.3% rise in the top line is an impressive performance in the current environment, it comes as a disappointment after the group announced sales growth of 29.4% in the first four months of the year.

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Operating profit rose by 20.1% to £18.5m (2011: £15.4m), while the margin was held at 5.6%. Earnings per share rose by 1p to 11p and the dividend was increased from 2.7p to 3p, which the firm said reflected its confidence in the outlook for the business.

Ian Fraser, Chief Executive said: "Looking ahead, we are pleased to report that recent trading has been encouraging and the group is well positioned for continued good progress. We are nonetheless mindful of economic uncertainties which prevail across Europe.

"Our revenue growth rate in constant currency of 25.1% reflects an excellent performance from Buck & Hickman and good progress in the Brammer growth drivers of Key Accounts, Insites and cross-selling, resulting in continued gains in market share. Our customers are facing increasing challenges in competitive markets and our ability to add value through the Brammer Value Proposition is proving highly attractive and effective."

The firm added: "The performance of Buck & Hickman has exceeded our expectations. Despite the weak market conditions, the Buck & Hickman business performed very well during the first half with like-for-like sales per working day growth of 14.0%."

In Germany, sales per working day (SPWD) on a constant currency basis grew by 3.0%, while operating profit improved by 19.4% to £4.3m. Key Account growth was 13.1%, with Key Accounts now representing 28.9% of total sales. However, here too, there was a slowing down of growth in the final two months of the reporting period, as Key Accounts sales had been running 15.9% higher than a year earlier in the first four months of the year.

In France, SPWD in constant currency increased by 6.1%, whilst operating profit was flat, reflecting investment in sales, distribution and administrative costs to generate future growth, while in Spain SPWD increased by 1.8% and operating profit increased by 16.7% to £2.1m.

SPWD in its Eastern European businesses declined by 4.2%, while operating profit declined by 30% to £1.4m. In Benelux countries SPWD grew by 10.3% although operating profit was flat.

The share price fell by 7.62% to 230.25p by 11:30.

NR