Companies: PRV ��

Filtration and environmental products play Porvair continues to deliver sales and profits growth for shareholders, as well as a racy ride in environmental technology. Interim figures to May were encouraging, with operating profits spiraling 18% higher to �1.3m on 7% sales growth to �23m, sending earnings 36% north to 1.5p.

All this despite a drop in profits in the US filtration business, which specialises in the filtration of hot metals – aluminium in particular – where input costs rose faster than selling prices in the early part of the year, putting margins under pressure. Management, led by chief executive Ben Stocks, has since cut costs and started to successfully pass on price rises.

Elsewhere the news encouraged, with the UK Microfiltration division seeing 7% sales growth to �12.8m and a 38% profits jump on demand from the aerospace and bioscience sectors. Profits growth here was also helped by the purchase of the minority interest in the division last year.

For the year Porvair, which makes twice as much profit in the second half as the first, is forecast to deliver improved pre-tax profits of �3m (�2.8m) and impressive 24% earnings growth to 4.7p. That gives it a racy rating of 30.5 times, despite the price coming back with the market. Nevertheless, analysts argue the core filtration businesses alone underpin the existing valuation, with the Advanced Materials arm – involved in research and product development in the fuel cell market – throwing in further upside.

Environmental funds have built small positions in Porvair, recommended here as a speculative buy at 129.5p in January, and we still think the shares have appeal.

Porvair	LSE	�52.74m	130.00p	-0.50p
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