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Metnor

Companies: MTG ��
18/04/2006

Shares in evolving property and construction play Metnor nudged north on a 47% profits leap to �5.1m for the year to December, ahead of analysts’ forecasts. Adjusted pre-tax profits, adding back goodwill and the exceptional costs of closing its galvanizing plant in Middlesbrough, moved from �3.4m to �5.1m on record turnover of �79m.

Chief executive Stephen Rankin said all major divisions at the Newcastle-based firm, with the exception of galvanizing, made strong contributions to the results. Contracting business Norstead had a good year, particularly in the south, and the construction arm performed well, making encouraging gains in the health care and care homes sector. Metnor also has property development projects in the pipeline.

Construction and property related work represents the future for Metnor, which has already announced an exit from low margin galvanizing, an area of the business hit by overcapacity and rising raw material prices. The galvanizing business is being sold to full-listed Hill & Smith, subject to OFT clearance - a deal that will leave the group with healthy cash balances.

Forecasts for 2006 now strip out galvanizing and so predicted profits have been pulled back from �6m to �5.3m from a top line �78m, giving earnings of 23.8p. By 2007, investors might expect a profits move to �6m and earnings of 27p. Those figures mean Metnor trades on forward multiples of only 10.5 and 9.2, with prospective yields of over 4%, and a soon-to-be fortified balance sheet. Well worth a look.


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James Crux

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