".. Brammer�s product range is the largest and most comprehensive of any Maintenance, Repair and Overhaul (MRO) supplier in Europe. With over 2,100,000 product lines available from the world�s most respected and reliable manufacturers, we supply top quality bearings, belts & pulleys, chains & sprockets, linear motion, motors, seals, gearboxes, pneumatics, hydraulics, clutches & couplings, tools & maintenance and health & safety products for your key production and operational processes..."

Aerospace, Automotive, Chemicals, Construction & Aggregates, Food & Drink, Glass, Health & Safety, Metals, Petroleum, Pharmaceuticals, Pulp, Paper & Packaging, Recycling Industry, Transport, Utilities..

Might perhaps be regarded as one of those companies that benefit from supplying increased numbers of parts and machine components to a cross section of industries whenever industrial recovery or growth is under way. Share price has surged and plunged a few times in the past.

Established in 1920, Brammer employs over 2500 people in more than 300 locations in 16 countries.

company history

Company website

Interim Results

RNS


RNS Number : 4086K

Brammer PLC

30 July 2013






FROM HUDSON SANDLER FOR
BRAMMER PLC

PRESS RELEASE



30 July 2013





Brammer plc ("Brammer" or the "Group")



2013 INTERIM RESULTS





Brammer plc, the leading pan-European added value distributor of industrial maintenance, repair and overhaul products, today announces its unaudited results for the six months ended 30 June 2013.



Financial Highlights



· Total group revenue down by 0.8% to £328.4 million (2012: £331.1 million).



· Profit before tax up by £0.5 million to £14.6 million (2012: £14.1 million+), operating profit up by £0.7 million to £16.6 million (2012: £15.9 million+) and EPS up by 3.3% to 9.4p (2012: 9.1p+).



· Gross margin up 100 basis points to 30.7% (2012: 29.7%).



· Operating profit (pre amortisation and exceptional items) down by 7.5% to £17.2 million (2012: £18.6 million+).



· Profit before tax (pre amortisation and exceptional items) down by 9.5% to £15.2 million (2012: £16.8 million+).



· Inventory levels reduced by £13.7 million in total since 31 December 2012, representing a reduction of 14.0%. Inventory turns increased from 4.5 to 5.2 times.



· Strong operating cash generation (pre exceptional items) of £13.1 million (2012: £6.1 million).



· Additional long term funding obtained through the issue of €20.0 million of private placement notes with a fixed rate coupon of 3.36% maturing in 2023,with a further €20.0 million tranche issued in July The total facility is $100 million.



· EPS (pre amortisation and exceptional items) down by 9.3% to 9.8p (2012: 10.8p+).



· Dividend up 13.3% to 3.4p (2012: 3.0p) reflecting the Board's confidence in the outlook for the business.







Operational Highlights*



· Continued successful execution of organic growth strategy:



- Overall sales per working day down by 1.7%, but on an improving trend that saw a 1.0% increase in the month of June.



- Continued market share gains in recovering markets.



- Key Account sales per working day up 7.3% with revenues from Food and Drink up 12.0%, Metals up 12.9% and Utilities up 9.4% demonstrating the group's increased resilience to continuing economic uncertainty in its markets. Total Key Account sales, now including Buck & Hickman, represent 53.1% of total revenues (2012: 48.5%).



- InsiteTM sales growth of 8.6% (2012: growth of 10.4%) with a net 45 new locations established.



- Strong revenue growth of 24.5% in Tools and General Maintenance in continental Europe, 5.0% overall growth, following successful launch of the first pan-European catalogue in September 2012.

- Overall Brammer delivered £28.5 million (2012: £28.3 million) of validated cost savings to our customers.





* at constant currency



+ prior periods' results restated to reflect retrospective application of IAS19R - Employee Benefits







Ian Fraser, Chief executive said:



"We have seen sequential month on month revenue improvement throughout the first half. Whilst there are signs of recovery in some of our markets, we believe much of our development is arising as a result of several growth initiatives where significant investment in the last 12 months is now beginning to bear fruit. Accordingly, we are pleased to report that the improving trends in the first half have been encouraging and the group is well positioned for continued good progress".

Brammer PLC (BRAM:LSE) set a new 52-week high during today's trading session when it reached 415.00. Over this period, the share price is up 87.73%.

IC today rates Brammer a hold, with the robust rise of late. Sold my holding.

StockMarketWire.com
Brammer has warned that full year underlying pre-tax profits will be ' somewhat below current expectations'.

It says that while sales growth since 1 July continued on the Continent, its UK sales had been affected by reduced spend amongst a small number of large customers.

An interim management statement says: "Despite challenging market conditions we have gained market share across our continental European markets. During the four-month period total sales per working day ("SPWD"), at constant currency rates were up 15.5% versus the same period last year and up 8.0% excluding Lönne.

"Including several small bolt-on acquisitions (see table below), SPWD were up 9.4% in Germany, 14.6% in France, 14.8% in Spain, 1.3% in Benelux, and 44.2% in our Eastern Europe and Other segment. SPWD in our UK segment, which represents 39.5% of total sales, were down by 3.1%. Six large customers with annualised revenues of £58 million in 2013 have reduced spend by over 20%, giving a year on year decline in 2014 of around £14 million. This has an adverse 5% effect on UK SPWD, and a concomitant effect on gross profit and trading profit."

Looking ahead, the group - a leading distributor of quality industrial maintenance, repair and overhaul products - said: "Whilst trading conditions have been less favourable than expected, our Key Account, InsiteTM, cross-selling and vending growth driver initiatives, together with a number of small bolt-on acquisitions have underpinned our growth momentum, providing profitable market share gains for the medium and longer term.

"However, the reduced demand from a small number of large customers in our UK business, combined with deteriorating market conditions in continental Europe and foreign exchange headwinds, will result in full year underlying profit before tax being approximately £35 to £36 million, somewhat below current expectations.

"Nevertheless, we are confident that our UK customer spend will recover and that our vending programme will contribute significant market share gains in the years to come."

Rollercoaster stock - playable on upslopes and downslopes!

Now more than 40% down in 5 months from its June peak, having previously climbed more than 50% in 10 weeks July/August 2013.
No shortage of other dramatic surges and falls over the last 20 years. Up at 487p in May 1998, down at 32p in Nov 2002, up at 242p in June 2007, down at 46.5p in March 2009.

StockMarketWire.com
Brammer continued to gain market share in the year to the end of December through organic growth and strategic acquisitions, despite challenging market conditions in continental Europe and the UK.

The company said this included focusing on its self-help growth driver strategies which enable it to outperform its markets.

Brammer said that overall it delivered a record £66.2m of customer validated cost savings to customers. Revenue grew by 11.0% with sales in the year totalling £723.6 million.

Brammer said that as a sizeable proportion of its operations are based in continental Europe, it experienced a currency headwind equivalent to 3.6% of revenue growth.

At constant currency, revenue increased by 14.6% - a resilient performance achieved through clear focus on our self-help growth drivers, which delivered organic sales per working day (SPWD) growth (including incremental growth of its new Scandinavian business and the impact of the bolt-on acquisitions) of 6.8%, a rate that accelerated through the year. Key Account SPWD grew by 8.7% and base business SPWD grew by 22.2% in total, 4.4% organic growth (including incremental growth of Scandinavia and the impact of bolt-on acquisitions). The company said: "We experienced an overall sequential improvement in SPWD growth during the year with total growth of 15.5% (8.2% organic growth, including the impact of bolt-on acquisitions) in the second half compared to total growth of 14.1% (5.4% organic growth, including the impact of bolt-on acquisitions) in the first half.

"However, market conditions affected our regions in differing ways, with all regions experiencing this sequential SPWD improvement apart from the UK, which declined 2.8% overall and 4.1% in the second half.

"As previously announced, this is largely due to six large UK customers, with annualised revenues of £58 million in 2013, reducing their spend by over 20%, as a result of challenging conditions in their end markets which resulted in a year on year revenue decline in 2014 of around £14 million. The UK result contributes an adverse effect of 1.3 percentage points to the Group SPWD growth rate. Continental Europe reflected a SPWD total growth rate of 29.5% (14.7% organic growth, including the impact of bolt-on acquisitions), growth rates significantly exceeding the market."

Chief execuitve Ian Fraser said: "In 2014 we have continued to demonstrate our resilience whilst expanding our European footprint into Scandinavia. We have invested heavily in growth drivers to counter difficult market conditions; as a result we have enjoyed improving year on year growth rates in the last eight quarters (excluding the benefit from our Scandinavian acquisition) as our strategy of focusing on Key Accounts, Insites, Vending, and cross-selling initiatives continues to deliver results.

"Our continental European businesses have performed well, whilst the performance of our UK business has been disappointing, as previously indicated almost entirely due to a small number of large national and European Key Accounts reducing their spend reflecting challenging conditions in their end markets. We expect that our investment in growth drivers will enable us to continue to gain market share and provide good revenue and profit growth in the years to come."

StockMarketWire.com
Brammer expects first half revenues to higher than a year ago but warns that profits are likely to be lower reflecting testing market conditions and FX headwinds.

Brammer - Europe's leading distributor of quality industrial maintenance, repair and overhaul products - expects an improved performance in the second half, supported by accelerating growth rates and the implementation of a major cost reduction programme. The programme has already begun which is expected to save £5mof costs during the remainder of this year.

An update issued ahead of today's annual general meeting says that sales per working day during the four months to the end of April, at constant currency rates were up 8.2% versus the corresponding period last year. Including only the incremental growth from the bolt-on acquisitions made in 2014, total SPWD growth was 1.8%.

It adds: "Despite challenging market conditions, growth in continental Europe (excluding Nordic region) was 6.3%, continuing the strong momentum from 2014. SPWD in our UK segment were broadly flat, compared to a 2.8% reduction in 2014, reflecting more stable contributions from larger Key Account customers as well as some positive signs of a return to growth. In the Nordic segment, SPWD reduced by 17.4% reflecting a challenging market and weaker demand from customers in the oil and gas sectors.

"Gross margin fell by 90 basis points mainly as a result of strong growth in the lower margin Key Account and Tools and General Maintenance ("T&GM") business and acquisitions made in 2014. However, the margin is now on an improving trend and as our volume and purchasing power in Tools and General Maintenance increases we expect this segment to provide similar margins to the rest of our business."

StockMarketWire.com
Brammer's underlying pre-tax profits fell to £14.1m in the six months to the end of June - down from £17.5m last time.

Sales were up 0.4% (7.5% at constant currencies ) at £365.6m but operating profits fell to £17.2m - down 16.5% or 12.5% at constat currencies.

On a reports basis, operating profits were £12.2m - down from £14.7m - and pre-tax profits fell to £9.1m from £11.6m.

Chief executive Ian Fraser said: "Our business outside the UK and Nordic regions performed well with overall SPWD growth of 13.7% at CER, and organic SPWD growth of 5.5%, reflecting further market share gains in challenging markets. Our UK business reversed the deterioration seen in the second half of last year with an organic SPWD decline of 0.2% (compared with a decline of 4.1% in the second half of last year). However our Nordic business which is heavily exposed to the Oil and Gas sector saw organic SPWD decline of 15.9%.

"Our vending programme (Invend), whilst in its infancy, produced excellent results with strong signings and installations. Vending customers now represent 5.4% of revenues and grew 29.9%. We are encouraged by the rate of improvement in vending machine wins and installations.

"For the remainder of the year, we expect to see continued improvement in our UK business, and solid growth in our continental businesses, but our Nordic business will continue to suffer from ongoing market headwinds. We have seen evidence of an improving trend in gross margins since the end of the first quarter, and should benefit from the impact of the cost reduction programme, completed in the first half. Whilst mindful of tough market conditions and the impact of continuing weakness in the Euro, we remain on track to meet the Board's expectations for the full year.

"More broadly we expect to see limited industrial output growth in Europe over the next two years, and will therefore continue to focus on our growth driver strategy. Our Invend, cross-selling and Key Account programmes will enable us to outperform the market. Our vending programme (Invend) continues to gain traction and is beginning to deliver attractive returns."

StockMarketWire.com
Brammer, a European distributor of quality industrial maintenance, repair and overhaul products, expects profits to fall this year despite revenue at constant currency for the four month period to the end of October has risen 2.7% higher, and is 5.7% higher year to date.

There has been a reduced UK performance, particularly in tools and general maintenance last month due to further deterioration in the steel and aerospace sectors which is forecast to continue.

The company says that its cost reduction programme has been extended.

It adds that its markets remain challenging, with a significant deterioration in the UK, which it does not expect this to change in the immediate future.

Full year profits will be lower than last year, reflecting testing market conditions and FX headwinds.

It now expects full year underlying profit before tax for 2015 to be approximately £28m.

Brammer reports that it will continue to focus on our growth drivers, on recovering momentum in its UK business, improving profitability in its Nordic business, and ensuring our cost saving actions protect profitability.

StockMarketWire.com
Brammer posts underlying pre-tax profits of GBP27.6m for the year to the end of December - down from GBP35.1m in 2014.

Sales fell to GBP717.3m from GBP723.6m and earnings per share tell to 15.1p from 20.7p. The dividend is maintained at 10.7p per share.

On a reported basis, EPS fell to 7.3p from 9.2p and pre-tax profits of GBP13.5m were down from GBP17.7m.

Chief executive Ian Fraser said: "Financial year 2015 was tough for Brammer with particularly weak market conditions in the UK and Nordic regions exacerbated by execution problems in our UK business. 2016 has started in similar vein to the final quarter of 2015, with good performance on the continent being offset by continuing difficulties in the UK and Nordic regions. In response to these challenges we initiated a number of actions during 2015, which should lead to improved performance over the course of the current year. We have made management changes in our UK business and expect to see a turnaround during 2016. In our Nordic business we have accelerated the implementation of core growth drivers to help offset the declines in the offshore oil and gas business.

"Our margin improvement programme is proceeding well, with the underlying margin on an upward trend. Our stock reduction programme has progressed well with a reduction of £6.5 million in the first two months. Whilst we expect to make progress in each of these initiatives in the current year, the positive effect of these on the Group's earnings will be offset by the one-off impact of the focus on inventory reduction."

Separately, Brammer announced the appointment of Duncan Magrath as an executive director of the Company with immediate effect. He will take on the role of group finance director in succession to Paul Thwaite following his departure on 31 March, as previously announced.

Brammer says Magrath has a wealth of financial and listed corporate experience and, between 2008 and the end of April 2015, was chief financial officer of Balfour Beatty plc.

Brammer also announced the appointment of Steve Ashmore as an executive director with effect from 4 April. He joins the board as regional managing director with responsibility for operations in UK, Ireland and Iceland.

StockMarketWire.com
Brammer's full year expectations are unchanged but there will be an increased weighting towards the second half, according to a statement issued ahead of today's annual general meeting.

The group said continued challenging trading in the UK and Nordics was partially offset by growth in Continental Europe.

It said underlying gross margin percentage was 20 bps up on last year, but offset by lower rebate accruals as a result of stock reduction programme.

It reports good progress on the stock reduction programme - £16m reduction YTD and on track to deliver £30m reduction by September 2016.

Direct Vending sales exceeded £1m for the first time in April. 1,595 machines installed to end April, with a healthy installation pipeline of 380 machines.

The group says the focus remains on the key operational priorities set out in the March preliminary results statement.

StockMarketWire.com
Brammer has seen a significant slowdown in sales against its expectations since its last trading update on 13 May.

Sales per working day in May were down 3% compared with last year. It saw a weak performance in the UK, which was down 6%, but also more broadly across Continental Europe.

It says that while the last few days of the quarter are very significant for the month's result, based on the performance to the end of last week, it is now clear that the weakness seen in May has not reversed as expected and has continued into June.

The UK started the month positively, but it has experienced a particularly weak performance over the last few days. Underlying margin in May and June month to date was down against the previous year. The underlying margin for the first half is expected to be slightly ahead of the prior year; however, this is more than offset by the impact of lower rebate levels from reduced sales and stock reduction.

As such, it now anticipates adjusted profit before tax in the first half to be below expectations at approximately £5m. As a result of this reduced level of profitability, the group will be close to its net debt/EBITDA bank covenant1 at the period end. It adds: "In the light of current market conditions, we are reviewing the Group's trading outlook for the year as a whole, and the UK in particular (where recovery plans are still at an early stage). We are taking measures to improve profitability and strengthen the Group's balance sheet. Our stock reduction programme continues to make progress and is still expected to deliver a £30m reduction by the end of September 2016.

"The Board is now reviewing whether it is appropriate to declare an interim dividend in respect of the half year and will provide a detailed update on its revised expectations for the full year at the time of the interim results announcement on 4 August 2016."

StockMarketWire.com
Brammer's adjusted pre-tax profits fell by 65% to £5.0m in the six months to the end of June with adjusted operating profits down 52% at £8.4m.

Sales were 1.3% down at £372.3m and on a reported basis the group posts a pre-tax loss of £13.9m against a profit of £9.1m a year ago. The board has decided not to declare an interim dividend to enhance focus on cash generation.

Chairman Bill Whiteley said: "Given the current macro-economic uncertainty, we are not expecting any improvements in market conditions in the UK and Europe beyond a return to levels seen in the first four months of the year.

"The Group will continue to progress its existing operational priorities to improve the UK business, improve underlying gross margins, increase cash generation through stock reduction and reduce net debt. The Group should see increasing benefits from these operational improvements in the second half.

"Against this background, the Board initiated a detailed business review and this will be taken forward by Meinie Oldersma, the new Chief Executive of the Group, to identify the actions needed to improve the operational and financial performance of the business as well as its ongoing capital requirements. The conclusions of this review will be announced in the fourth quarter."

StockMarketWire.com
Brammer has agreed a cash offer 165 pence per share from AI Robin, a wholly-owned subsidiary of funds managed by Advent International Corporation.

The offer, which values the company at £221.5 million, represents a premium of approximately 69.2% to last night's closing price of 97.5 pence.

Brammer said the recent strategic review of its business, initiated by the board, has confirmed a number of key strengths of the group and also identified a number of material operational issues and the key actions needed to address these issues.

The Board of Brammer has considered that addressing the operational issues to deliver a turnaround of the business as a listed company would be complex, require significant structural and behavioural changes, incur significant cash reorganisation costs and take at least three years to implement and would, therefore, carry significant execution risk and uncertainty for a public company.

The Board of Brammer also recognises the financial and commercial value of the partnership with Advent given the latter's operational expertise and significant experience in the distribution and power manufacturing sectors. In addition, Advent's significant equity investment will greatly reduce the Company's debt burden, thereby improving Brammer's operational flexibility.

The Board of Brammer therefore believes that the Offer provides increased value and certainty for Brammer Shareholders compared with the risk-adjusted potential value that could be delivered by the actions designed to turnaround the business as a listed company, which itself is conditional upon a significant refinancing of the Brammer Group.