Chloride Group

Secure power solutions specialist Chloride is building its order book in a market with attractive fundamentals.

In its latest update, Chloride said results for the year to March, set for release on 1 June, would match expectations – the market expects £38m of profit pre-tax and 9.6p of earnings – with performance underpinned by a ‘satisfactory’ fourth quarter. Annual sales were up 3%, boosted by favourable currency movements, with product sales ‘pleasing’ and service sales growing organically once again.

Tim Cobbold, CEO, flagged up the successful integration of recent acquisitions, including AEES, a secure power supplier to French and international energy markets and the rail and underground sector-focused Emergency Power Systems (EPS) in the UK, as well as the successful delivery of savings from last year’s restructuring bout. And in yet another positive, Chloride’s year-end order book stood at circa £160m, increased by roughly 16% year-on-year and providing ‘an excellent platform’ for the year ahead.

A strongly cash generative, dividend-paying business drawing resilience from its geographic diversity, Chloride grew sales marginally from £152.3m to £152.7m in the half-year to September, although pre-tax profits, before £3.5m of restructuring costs, declined by 16% to £16.2m in some challenging markets. For March 2011, analysts will be looking for £40.7m of profit pre-tax, 10.62p of earnings and a 5.25p dividend, placing the shares on a prospective p/e of 20.5.

Nevertheless, with secure power remaining so essential for global business continuity across an array of sectors, Chloride looks well placed for long-term growth and its shares, though not especially cheap, having surged up from a 52-week low of 133p, should have further to go.