Continuing improvement
Trifast (LON:TRFT) has released a pre-close update that has indicated the favourable trading conditions persisted through the final quarter, boosted by FX tailwinds. As a result profits have exceeded management expectations, accompanied by a strong cash performance. We have increased our earnings estimates for both 2017 and 2018 once again. When combined with the stronger than expected net debt position this has led us to also increase our dividend expectations.
Strong trading performance continues
Trading performances across Trifast’s main regions have continued to outpace management expectations through the final quarter of the year. Organic growth in every region has been sustained at high levels, with the benefits of the investment programme introducing new revenue streams that added to strong demand from telecom, white goods, automotive and electronics customers.
In addition, the weakness of sterling has added an additional £1.4m of FX benefit in the second half of the year, ahead of our previous expectation of a £1m benefit. As a result, we have increased our revenue expectations by £4m for both FY17 and FY18, and we now expect FY17 underlying pre tax profit of £20m, increasing our normalised EPS estimate by 2.4% to 12.70p (from 12.40p previously).
Despite possible margin pressures, our FY18 EPS estimate is 1.7% higher at 12.90p (from 12.68p previously). We now expect net debt to end the year close to £8m, some £4m better than our prior expectation with tight working capital control adding to the improved profitability. In line with the stated policy and given the strong balance sheet and increased EPS expectations, we now expect the dividend to total 3.25p for FY17.
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