Deleveraging picks up steam

Today’s interim results to June demonstrated strong progress overall, particularly at the margin level. Double digit growth in the regulated and less regulated kettle control markets was encouraging. Furthermore, the restructuring of the Consumer Goods division and the exit from price sensitive kettle control markets also underpinned the rise in margins. Indebtedness declined markedly, reflecting a combination of firm controls in place, positive cash flow and the placing of 5% of the shares during Q2. However, Q3 has proven volatile within the kettle controls market. 

Higher commodity pricing (copper/silver) and a less favourable translation rate (Australian dollar and the Euro versus sterling), are expected to have a wider impact to revenues and profitability from H2. As such we have revisited our financial expectations for FY24 and FY25, resulting in adj. EPS downgrades of c. 6% for both years. We have reduced our fair value/share to 145p (from 167p previously), which represents a premium of 74% to the current share price).