Both of Carclo's (LON:C1Y) larger divisions, Technical Plastics (TP) and LED Technologies, grew in line with management expectations during FY17, while the smaller Aerospace division continues to experience stable trading conditions. FY18 has started well with the announcement of a second mid-volume project for Wipac. This new award underscores the relevance of the recent FLTC acquisition, which substantially enhances Wipac’s ability to progress multiple projects simultaneously. We leave our estimates unchanged but slightly increase our indicative sum of the parts valuation.
TP benefiting from expansion to support customers
TP growth depends primarily on expansion of capacity to meet demand from new and existing customers. Production at the facility in Taicang, completed in H216, ramped up during FY17 to support demand for disposable medical consumables from a global healthcare customer. This was supplemented with new business wins and the drive to secure further work continues. Work doubling capacity at the Bangalore facility is ongoing and scheduled for completion this summer. The integration of the Precision Tool & Die business, acquired in October 2016 to enhance the prototyping offer, is progressing well with the first batch of synergistic projects underway. Importantly operating margin is expected to have reached management’s stated target of 10%.
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