Cookson Group
Cookson Group ups FY profit projections as Q3 revenues rise 6%, shares rally 11%
Materials science company Cookson Group (LSE: CKSN) said it expected its full year profit to be at the upper end of analysts’ forecasts as Q3 revenues increased 9% quarter on quarter at constant exchange rates and improved end-market and trading performance continued into the final quarter of the year.
Total group revenues in Q3 amounted to £498 million, marking a 9% increase from Q2 at constant exchange rates and a 6% increase at reported rates, but were 26% below the revenues for the equivalent period of 2008. Revenues in the Ceramics business rose 7% quarter on quarter to £279 million, while Electronics posted a 5% revenue increase to £145 million. The group’s net debt amounted to £471 million at 30 September, marking an increase from £438 million at 30 June due to increases in working capital resulting from higher levels of activity during the quarter.
Net finance costs for the full year 2009 are expected to be not more than £40 million.
The group said it anticipated the normal reductions in activity in December due to shutdowns of some customer production, yet trading profits for the full year is expected to be at the upper end of current projections. Trading performance in 2010 will hinge on the speed and strength of the recovery in the global economy and Cookson’s key end-markets such as steel production, foundry castings and electronics, which it said were “difficult to predict with certainly,” while expressing confidence that the group was well positioned for when a sustained recovery stiffens.
The strong results and projections reported by Cookson led broker Arbuthnot Securities to consider upgrading its recommendation for the group to “buy” from the current “neutral” and up its estimate for the full year pre-tax profits to £71 million from £45 million.
Shares in Cookson surged 11% on the news today.
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