More on BBA
BBA: Trading statement
BBA expects to report sales growth of around 10% in the first half of
2005. Profits (before goodwill impairment, restructuring costs and non-operating items) for continuing operations are expected to be flat compared to last year.
Increased profitability in the Aviation business is being offset by poor profitability in Materials Technology and reduced profitability from the Finotech joint venture. Finotech profits are expected to decline by around £3m compared to last year due to a planned transition to new manufacturing technology.
The Materials Technology business continues to suffer from high raw material costs and despite relatively healthy sales growth (+12%) profits are expected to decline by around £4m compared to last year.
Interest costs are also expected to be higher than the prior period due to
increased dollar interest rates and higher debt levels.
BBA is dogged by poor performance in its Materials Technology business but the good news is that Polypropylene prices (a key raw material) have started to decline in both the USA and Europe. Prices are forecast to fall further by
the end of 2005 although the rate and extent is uncertain.
The aviation business is performing well but higher oil prices and a slowing global economy pose some risk to growth.
The share trades at 308.5p, on a prospective PE (2005 earnings) of 14.6x, at the upper end of the sector range. The yield is 3.9%.
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