Fenner's full year expectations unchanged despite no market recovery

Industrial polymer-based manufacturer Fenner said its full year expectations remain unchanged despite its principal markets having shown no recovery.

In a trading update for 1 March to 12 July, the company said the medical business, part of its advanced engineered products division, performed well. The Secant programme was entering the testing and certification phase.

Fenner said although industrial businesses saw some fragility in the wider markets, new product initiatives were offsetting these effects.

The Hessle-based company said that while the small increase in the US rig count, combined with market share gains, is expected to benefit its oil and gas businesses, the effect of this is likely to be felt in the new financial year.

In the Northern Hemisphere, the company’s engineered conveyor solutions (ECS) division’s industrial businesses remained stable amid a challenging period in the US coal industry, therefore Fenner said it's focusing of its North American business remains on track.

Whereas in Australia, ECS's operations mitigated ongoing pricing pressures from customers in the mining industry.

Fenner said cash flow during the period reflected normal seasonality and has remained within the range of its expectations. However, due to the recent deterioration of sterling against the US dollar, the company’s net debt at the end of the year is likely to be above Fenner’s previous expectations. The company said it was entirely due to currency translation.

A weaker pound would benefit the translation of the company’s overseas earnings but given the timing it expects the impact in the current financial year to be marginal.

Fenner maintained that in any event, the underlying net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) ratio, which was measured by the company’s lenders using constant currencies, would not be impacted significantly.

Fenner said: “The board expects that the group will achieve an overall outcome for the financial year ending 31 August 2016 in line with previous expectations, save for the small currency related increase in earnings.”

Shares in Fenner rose 0.9% to 168.25p at 1537 BST.