TIDMBRAM
RNS Number : 5525N
Brammer PLC
29 July 2014
FROM HUDSON SANDLER FOR
BRAMMER
PRESS RELEASE:
29 July 2014
Brammer plc
("Brammer" or the "Group")
2014 INTERIM RESULTS
CONTINUED market share gains through organic growth AND
STRATEGIC acquisitions
Delivered GBP25.9 million of signed off cost savings to our
customers in 2014 to date
Brammer, the leading pan-European added value distributor of
industrial maintenance, repair and overhaul products, today
announces its interim results for the six months ended 30 June
2014.
Financial Highlights
-- Total Group revenue up by 10.9% to GBP364.1 million (2013:
GBP328.4 million). At constant currency total revenue increased by
13.1%.
-- Gross margin up 60 basis points to 31.3% (2013: 30.7%).
-- Underlying* operating profit up by 19.8% to GBP20.6 million (2013: GBP17.2 million).
-- Underlying* operating margin up by 50 basis points to 5.7%
(2013: 5.2%) despite significant investment in Tools and General
Maintenance and Vending.
-- Underlying* profit before tax up by 15.1% to GBP17.5 million (2013: GBP15.2 million).
-- Profit before tax down by GBP3.0 million to GBP11.6 million
(2013: GBP14.6 million), operating profit down by GBP1.9 million to
GBP14.7 million (2013: GBP16.6 million), reflecting GBP5.3 million
of acquisition related costs and exceptional items.
-- Successful share placing, raising GBP52.4 million net to
support ongoing acquisition strategy.
-- Underlying* basic EPS up by 10.2% to 10.8p (2013: 9.8p).
-- Reported basic EPS down by 24.5% to 7.1p (2013: 9.4p).
-- Interim dividend up 5.9% to 3.6p (2013: 3.4p) reflecting the
Board's confidence in the outlook for the business.
Operational Highlights**
-- Major acquisition of Lönne Holdings AS ("Lönne") completed in
January expanded the Brammer footprint into the Scandinavian
region. Lönne has been performing in line with expectations.
-- Six further bolt-on acquisitions completed in the period with
annualised revenues of EUR31 million and total consideration of
EUR9.5 million, with the acquisition pipeline remaining strong.
-- Organic(+) sales per working day ("SPWD") increased by 5.4% overall.
-- Continued successful execution of organic growth strategy:
- Further market share gains in tough markets.
- Group SPWD growth rate accelerating for the sixth consecutive quarter.
- Key Account SPWD up 9.8% with pan-European Key Account sales
growing 28.2%. Total Key Account sales represent 52.9% of total
revenues (2013: 53.1%).
- Insite(TM) sales growth of 12.3% (2013: 8.6%) with a net 13 new locations established.
- Strong revenue growth of 50.9% in Tools and General
Maintenance in continental Europe, with 4.7% overall Tools and
General Maintenance growth.
- Increased headcount in our European Tools and General
Maintenance division to drive further growth in the EUR50 billion
tools and maintenance market.
- In addition, we have significantly invested in our vending
operations, with 107 staff deployed, and we expect this to drive
growth in 2015 and beyond.
* pre amortisation of acquired intangibles, acquisition related
costs and exceptional items
** at constant currency
(+) including incremental growth from Lönne
Ian Fraser, Chief executive said:
"In 2014 we have continued to demonstrate our resilience whilst
expanding our European footprint into Scandinavia. Despite market
conditions remaining challenging, we have seen improving growth
rates in the last six quarters (excluding the benefit from the
acquisition of Lönne) as our strategy of focusing on Key Accounts,
Insites(TM) and cross-selling initiatives continues to deliver
results out-performing the market. We are mindful of the recent
uncertainties regarding growth rates in our European markets in the
second half of 2014, but we remain confident our proven strategy
will help us continue to gain market share."
Enquiries: Brammer plc 020 7796 4133
Ian Fraser, Chief executive
Paul Thwaite, Finance
director
Issued: Hudson Sandler 020 7796 4133
Andrew Hayes
Katie Matthews
BRAMMER PLC
2014 INTERIM RESULTS
INTERIM STATEMENT
Trading
Despite only modest improvements in economic conditions across
Europe, Brammer has continued to demonstrate a resilient
performance in our underlying businesses. Our revenue growth rate
in constant currency of 13.1% reflects the continued progress made
against our growth strategy of focusing on Key Accounts,
Insites(TM) and cross-selling, together with a contribution from
the strategic acquisition of Lönne in January 2014. We have
continued to achieve market share gains and have established a
strong presence in the Scandinavian market.
For the six months to 30 June 2014 sales at actual exchange
rates were GBP364.1 million which represents an increase of 10.9%
over the previous year. On a constant currency basis organic SPWD
growth (including incremental growth in Lönne) was 5.4%. All of the
key growth drivers contributed to this good result. Key Accounts
grew by 9.6%, with 4 new pan-European accounts signed in the period
and the prospects for further wins remain excellent. There was
further growth in Insites(TM) with 13 (net) new Insites(TM)
established and sales growth of 12.3% to GBP95.3 million.
Cross-selling also contributed, with non-bearing sales growing by
16.9%. Bearing sales grew by 0.7%, reflecting weak markets. Our
base business revenues (excluding Lönne) grew 0.8% in SPWD, a
significant improvement on 2013.
Despite market conditions remaining challenging, we have seen
improving growth rates in the last six quarters (excluding Lönne's
results) as our strategy of focusing on Key Accounts, Insites(TM)
and cross-selling initiatives continues to deliver results
out-performing the market.
Growth rates at constant
currency (%)
--------------------------- ------
First half Second First
half half
SPWD - external sales 2013 2013 2014
UK 1.6 2.7 -1.4
Germany -4.8 0.4 7.7
France -3.1 -6.7 3.9
Spain -3.5 12.3 14.0
Benelux -4.4 2.5 7.7
Eastern Europe & Other -5.6 -0.6 27.7
Scandinavia -
Total Group -1.7 1.4 14.1
Gross profit margin increased by 60 basis points compared to the
previous period, reaching 31.3%, a new high for the Group in the
first half.
Sales, distribution, and administrative costs ("SDA") (excluding
amortisation, acquisition related costs and exceptional items)
increased by GBP9.8 million to GBP93.4 million (2013: GBP83.6
million), with underlying SDA at constant currency increasing by
5.1%.
Underlying operating profit increased to GBP20.6 million (2013:
GBP17.2 million), including GBP1.6 million contribution from Lönne
with a resulting return on sales of 5.7%, 50 basis points above the
previous year.
Underlying pre-tax profit increased by 15.1% to GBP17.5 million
(2013: GBP15.2 million) with underlying basic earnings per share up
10.2% to 10.8 pence per share (2013: 9.8 pence per share).
Our Market
Brammer is the leading pan-European added value distributor of
high quality industrial maintenance, repair and overhaul products.
We are the authorised distributor of many of the world's leading
engineering component manufacturers, supplying bearings, mechanical
power transmission components, fluid power, and tools and general
maintenance products, together with engineering and associated
industrial services, to the maintenance repair and overhaul ("MRO")
market across Europe.
We estimate the European bearings market to be worth around EUR2
billion annually and we have approximately 10% share of that market
making us the clear European market leader.
In Mechanical Power Transmission we have approximately 3% of an
estimated EUR5 billion market. In Fluid Power we have just over 1%
of an estimated EUR10 billion European market and in our developing
product range of Tools and General Maintenance we have less than 1%
of what we now estimate to be a market worth at least EUR50 billion
across Europe.
Overall we estimate the market for our entire range of products
to be worth in excess of EUR65 billion, of which we currently have
a market share of just over 1% despite our leadership position. We
estimate our existing customer base spends around EUR6.5 billion on
our defined product range. Our share of our customers' total spend
is, therefore, around 10%, representing an opportunity to achieve
significant growth through cross-selling. Consequently our market
share will not be a constraint to growth for many years to
come.
Growth and Synergies
Our growth drivers have served us well over the past ten years;
in 2014 we have continued to invest in, and benefit from, our
growth strategy, prioritising Key Accounts, Product Range
Extension, Insites(TM) and segment-based marketing, and continue to
achieve growth well ahead of the market.
Product Range Extension and Growth Drivers
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