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Carclo – FY trading and net debt “in line”… but what with?

By Steve Moore | Monday 9 April 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Injection moulding manufacturing company Carclo (CAR) “confirms that the group's trading for the year ended 31 March 2018 and the level of year-end net debt were in line with its expectations set at the time of the trading update on 15 January 2018”. Sounds ok, though what was that 15th January “trading update” again?...

“the board now expects the group's performance for the current financial year to be significantly lower than previously planned… unexpected delay in the awarding of two large tooling and automation contracts. In addition, a large and long standing non-medical customer which had been indicating a strong second half for our moulded components has not yet increased its orders… LED Technologies… delays in the award of three new contracts are expected to materially reduce the division's profit for the current year.”

Ah! Not exactly an achievement to be “in line” with such a prognosis from less than 3 months ago! And no further update now?

Just that “the group will announce its preliminary results for the year ended 31 March 2018 on 5 June 2018”.

It was also stated in the January profit warning that “as a consequence of some of these delayed projects and lower customer orders, the board has now reduced its profit expectations for the 2018/19 financial year albeit these revised expectations will still represent healthy year on year growth”.

However, forecast earnings per share of circa 11p for this now current year, still compare to more than 12p delivered in 2016/17 (circa 9p now anticipated for the company's year just ended, with net debt up to circa £33 million (circa 45p per share)). The shares are currently around 90p.

With I having already previously considered that credibility needed to be regained and the profit warning just two months after the company had stated it was, across the group, anticipating “stronger second half performance”, there remains much more to do before I’ll become significantly less wary here. I thus presently continue to avoid.


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