Andrews Sykes Group plc
(Public, LON:ASY)
Equipment hire specialist Andrews Sykes felt recessionary pain in 2009, though its market leading position and continued healthy cash generation leave it well placed for eventual upturn.Wolverhampton-based 'Sykes', which hires, sells and installs pumping, portable heating, air conditioning and ventilation equipment, experienced a disappointing £5 million decline in adjusted operating profits to £12.9 million in the year to December, on reduced sales of £54.4 million (2008: £67.4 million), as the global downturn made an impact. However, the bar had been set high - Sykes enjoyed a record 2008 - and the 2009 performance was broadly comparable to that of pre-credit-crunch 2007, when market conditions were positively buoyant.
Despite recession, Sykes still delivered creditable pre-tax profits of £13.3 million (2008: £15.4 million), which benefited from lower finance costs as net debt was reduced from £16.9 million to £2.8 million, with net cash inflow improving from £10.6 million to £14.3 million.
Though Sykes' main hire and sales business in the UK and Northern Europe was hit by the recession, the effect was somewhat mitigated as niche markets were exploited and developed. Meanwhile in the Middle East, record operating profits were achieved again, although it is unlikely such levels of profitability will be maintained into 2010. Management also highlighted an encouraging turnaround in the restructured UK-based air conditioning installation business, with operating losses of £100,000 converted into profits 'of a similar amount'.
Though Andrews Sykes skipped the dividend following a difficult year, further share buybacks are on the cards and the shares, modestly-priced at 110p, down from a 2007 peak of £2, offer a degree of upside potential. They are well worth a speculation.
http://www.growthcompany.co.uk/company-profiles/a/1023947/andrews-sykes.thtml
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