More on BBA
BBA: trading statement
BBA reported that its core Aviation business has seen strong trading in the year to December 2005. Sales have grown (although the company does not state by how much) and operating margins have improved. Operating profits are said to be significantly better than last year.
The company has added two new locations to its US operations and hopes to add two more within the next few weeks in order to benefit from the strong market in that country. The company also indicated that it was looking for acquisitions to boost growth further.
BBA is spinning off some of its unrelated businesses, (grouped together under the name ‘Fiberweb’) which is probably sensible-we believe a company should never stray from its area of core competency. Fiberweb sales are ahead of last year although operating profits have been hit by a spike in raw material costs, mostly caused by hurricanes in the US.
Cashflow is good and prospects seem good. Cash raised from the disposal of Fiberweb can be used to fund acquisitions which should provide good upside when they materialise.
The share trades at 323p, on a prospective PE (2006 earnings) of 16.3x, at the upper end of the sector range. The yield is 3.8%.
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