Somero Enterprises 'pleased' with growth

Somero Enterprises updated the market on its trading on Monday, ahead of the annual general meeting to be held on Tuesday.

The AIM-traded company said it was “pleased” with the broad contributions to the company's growth in the first half, which had been driven particularly by strong trading in Europe, continuing the momentum in the territory from 2016, and by solid contributions from the Middle East, Latin America and its rest of world territories.

“In North America, while H1 trading in 2017 has been flat compared to the prior year due in part to poor weather across the US that has delayed numerous project starts and ongoing political uncertainty, we remain encouraged by healthy market fundamentals in the US that are reflected by the high-level of activity and extended project backlogs our customers continue to report,” the board said in its statement.

“In China, trading at the start of the year has been slow but we have seen signs of improvement and early traction with our new entry-level products.”

On a product basis, sales of Ride-On screeds and the company’s recently launched third generation 3D profiler system continued to be “strong”, and the company said it was also encouraged by early opportunities seen with the recently launched S-158 in China and the SP-16 Concrete Hose Puller.

“The mix of sales of our other products is consistent with our expectations.”

Somero said it continued to make “long-term investments” that support future growth by hiring additional sales, customer support, and engineering personnel in 2017, with the added headcount reportedly creating a need for additional office space in its Fort Myers, Florida headquarters.

“As a result, the board has approved plans to build a $1.3m expansion to the company's Fort Myers headquarters to accommodate planned growth.

“The building project will be completed in H1 2018, with the majority of the cost expended in 2018.”

The company said it remained “encouraged” by the positive trading environment across its footprint, the growth opportunities visible in North America, Europe, Middle East, Latin America and its rest of world territories, and the prospects for improvement in China for the remainder of 2017.

“This constructive, positive environment, combined with continued solid margin performance, cost management, and healthy operating cash flow generation means the company's trading to date is in-line with market expectations for the full year ending 31 December 2017.”

As it announced in its 2016 results on 15 March, the board had been reviewing the company's net cash position alongside the cash requirements for current business needs and future investment.

Following completion of that review, the board also announced on Monday that it would be distributing $7.5m in the form of a special dividend, representing a dividend per share of $0.133.

“The quantum of the special dividend reflects the board's confidence in the medium-term outlook for the company, and was based on the board's consideration of a number of factors including the company's 2016 year-end net cash balance of $20.2m, the company's intention to maintain an appropriate net cash buffer combined with operational and non-operational capital requirements,” the board explained.

The special dividend would be paid on 14 August to shareholders on the register on 28 July.