Brammer scraps dividend as it swings to loss

Brammer scrapped its dividend on Thursday as it said it swung to a loss in the first half.

For the six months to the end of June, the company made a loss of £13.9m compared to a profit of £9.1m in the first half of 2015 despite a nudge up in sales to £372.3m from £365.6m.

The group, which supplies industrial maintenance, repair and overhaul products, said it had experienced a challenging period in the first half, with a particular slowdown in trading in May and June. It said Europe continues to face headwinds reflecting economic uncertainty and, although it has gained market share in some territories, continuing issues in the UK and Nordics, as well as the adverse impact on gross margin as a short term consequence of its stock reduction programme have significantly reduced profitability.

Chairman Bill Whiteley said: "Given the current macro-economic uncertainty, we are not expecting any improvements in market conditions in the UK and Europe beyond a return to levels seen in the first four months of the year.

“The group will continue to progress its existing operational priorities to improve the UK business, improve underlying gross margins, increase cash generation through stock reduction and reduce net debt. The group should see increasing benefits from these operational improvements in the second half.”

The company said that conclusions of the business review to identify the actions needed to improve the operational and financial performance and the company’s ongoing capital requirements will be announced in the fourth quarter.

Brammer said its board had decided not to declare an interim dividend in order to “enhance the focus” on cash generation.

At 1530, Brammer shares were up 3.7% to 96.93p.