Tricorn posts record results

Tricorn Group, the AIM-quoted tube manufacturer, is to double its dividend after a record set of results.

In the year to March 31st, pre-tax profits rose 14% from £0.93m the year before to a record £1.53m, on revenues of £24.7m (2011: £21.8m). Adjusted earnings per share increased 47% to 3.78p from 2.57p.

The firm experienced a year-on-year improvement in operating margin from 5.5% to 7.2%, comfortably within the firm's underlying target range.

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The Aerospace division has seen the most encouraging growth during the year, enabling it to return to profitability, while Transportation and Energy & Utilities have also seen strong growth.

The company said: "Our alignment with major global OEM [original equipment manufacturers] customers and our expansion of manufacturing to serve the expanding markets of South-East Asia positions us well for the future and we are very optimistic about mid-term growth opportunities.

"The group has remained highly cash generative, returning to a cash positive position in a year during which it has repaid its term loan and invested £0.9m in new capital projects, as well as announcing its intention to invest an initial £1.0m in the forthcoming year in new manufacturing facilities in China."

Revenue for the Energy & Utilities division was up 11% on the previous year and operating profit margin improved to 9.2%.

Transportation revenue increased 21% year on year with changes in emissions legislation and favourable market conditions driving demand, while Aerospace revenue was up 8.0% on the previous year with demand strengthening through the year.

House broker Westhouse Securities said Tricorn delivered a strong set of results on improving margins across the group.

"While there was significant capex [capital expenditure] in FY2012 [fiscal 2012], this will be substantially higher again in FY2013 with the recent customer-led move into China. The Transportation and Energy & Utilities divisions both traded strongly throughout FY2012 and the Aerospace division was returned to profit," Westhouse analyst Robert Sanders said.

Going in to bat for his client, as any house broker would do, Sanders suggested Tricorn is "substantially undervalued", especially as there is scope for the strong forecast organic growth to be boosted by acquisition in due course.

Tricorn management reckons it is set for growth this year, even without an acquisition. "With our proven ability to deliver operational improvements we are confident of making further progress in the current year," the company said.

The share price rose 7.5% to 32.25p.

NR