Companies: UMC ��

Buoyed by the continuing strength of its core aerospace and defence markets, supply chain services and composite materials provider Umeco has flown in with encouraging interim results.

For the half to September, pre-tax profits soared 60.5% higher to �13m, on turnover up more than 30% at �197.2m. Near 26% earnings growth to 18.1p allowed the board to declare an interim dividend of 6.5p, increased from 6p a year earlier and covered more than 2.7 times by earnings.

CEO Clive Snowdon said strong organic growth was delivered in both the composites business, where the wind energy, marine and automotive sectors represent growth hot spots, and ‘supply chain’, where an extended contract with Rolls-Royce is ‘generating a high rate of growth’.

Despite uncertainties over problems facing airline operators and aircraft-makers, he remains confident about growth prospects, pointing out that the rising order backlog at Airbus and Boeing is concentrated on new aircraft, ‘for which Umeco should enjoy a high level of incremental business’.

Alongside the results, Umeco also cheered with its first major supply chain contract in North America, namely a five-year deal with ATK, a US-based defence contractor, secured through Umeco’s Pattonair business.

Forecasts for March 2009, downgraded slightly in light of a far less certain economic outlook, still suggest growth in pre-tax profits from �21.9m to �29.6m, on sales of �437.8m (2008: �335.2m).

Healthy earnings growth of 32% to 41.2p is predicted, placing Umeco, first backed by Growth Company Investor at 403p back in 2004, on a prospective multiple of just 6.7 with a bumper yield. The recent derating reflects concerns that global slowdown will affect the group’s end markets, although our view is that Umeco remains a firm hold for the long term.

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