Carclo (LON:C1Y) is focusing investment on its two larger established businesses – Technical Plastics (CTP) and LED Technologies (LED). Here a differentiated offer and long-term relationships with customers provide good earnings visibility and higher probability of a sustainable return. This strategy delivered strong revenue and profits growth during FY17. Despite a temporary setback at CTP during H118, which was balanced by outperformance at LED, growth appears set to continue, underpinned by contracts with blue-chip customers.
Outperformance at LED offsets slow start at CTP
The AGM statement noted that CTP’s performance so far in FY18 has been held back by key new programmes slipping from H118 into H218 as well as some operational issues, which have been resolved. This has been balanced by outperformance at LED, where the level of design, development and tooling activity was ahead of expectations. In addition, the small Aerospace division is expected to have stronger sales in H218 as some new programmes move to serial production. We leave our estimates broadly unchanged, moving some FY18 revenue and profit from CTP to the LED Technologies and Aerospace divisions.
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