From yesterday’s Newsletter we can conclude that Haynes (LSE:HYNS) is firing on one cylinder at least – it has an excellent business supplying mechanics with 1,000,000 pieces of information per day across Europe, where it is a market leader (HaynesPro).
But we need at least one more cylinder firing well to justify holding on to the shares at this price. Or, at least we need a good probability of future annual profits of £1m – £2m from the UK printed manual business and/or the North American/Australian printed manual business.
What are the odds?
First start with some facts
In the table I’ve traced the history of sales, operating profit and assets of the UK & Europe business on the one hand, and the North America and Australian business on the other.
In the table I’ve traced the history of sales, operating profit and assets of the UK & Europe business on the one hand, and the North America and Australian business on the other.
2011 | 2012 | 2013 | 2014 | 2015 | H1 2016
annualised |
|
HaynesPro + consumer digital
Sales (mostly Europe, some UK) |
£4.3m
(decline 2%) |
£4.7m
(growth 9%) |
£5.2m
(growth 10%) |
£6.1m
(growth 18%) |
£6.4m
(growth 5%) |
£6.8m (growth 6%, but 27% half-year to half-year) |
UK + Europe print
Sales |
£9.0m (decline 17%) | £8.6m (decline 4%) | £7.8m (decline 10%) | £6.5m (decline 17%) | £5.0m
(decline 22%) |
£5.0m
|
UK + Europe (HaynesPro + print) Operating profit | £2.4m (growth 9%) | £1.8m (decline 27%) | £0.9m (decline 50%) | £0.9m (growth 7%) | £0.6m (decline of 34%) | £0.6m |
UK + Europe (HaynesPro + print)
Net assets employed |
£13.3m | £13.5m | £13.8m | £11.2m | £10.5m | £9.3m |
UK + Europe
Operating profit/Net Assets |
18% | 13% | 6% | 8% | 6% | 6% |
USA printed
Sales |
£15.8m
(growth 7%) |
£12.9m (decline 18%) | £11.2m (decline 13%) | £12.7m (growth 14%) | £12.0m (decline 6%) | £10.2m |
Australasia + RoW printed
Sales |
£3.6m (growth 2%) | £3.6m (growth 1%) | £3.6m (decline 1%) | £4.1m (growth 14%) | £2.7m (decline 33%) | £2.3m |
North America + Australia
Operating profit |
£4.4m (growth 10%) | £2.6m (decline 41%) | £1.7m (decline 33%) | £2.6m (growth 50%) | £1.2m (decline 53%) | £0.1m |
North America + Australia
printed Net assets employed |
£21.9m | £22.4m | £21.6m | £20.9m | £16.1m | £15.7m |
North America + Australia
printed Operating profit/Net Assets |
20% | 12% | 8% | 12% | 8% | 1% |
Group profit after tax (before exceptionals deduction) | £5.0m | £3.2m | £2.5m | £2.8m | £1.6m | £0.4m |
This side of the Atlantic
UK and Europe print sales have declined by over 40% over 5 years. Profits from UK and Europe, even after throwing-in the digital profits, have fallen by three-quarters.
That’s the bad news. The good news is that …………….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1