Adhesive tape-maker Scapa (SCPA) is enjoying strong trading just as the fruits of a multi-pronged restructuring drive are beginning to reveal. This makes now an interesting time to consider a position in the group.
While a resurgent sterling is holding back many of the group’s peers, it revealed stronger-than-expected trading across the three key divisions of Industrial, Healthcare and Electronics at last month’s year-end trading update (10 Apr). Next week’s finals (28 May) are likely to be equally encouraging.
The Manchester-headquartered specialty chemicals outfit has done well to manage legacy issues. In March 2013 it agreed a new funding structure and the merger of its three UK pension funds, reducing future deficit recovery payments and administration costs. In April 2013 Scapa Holdings Georgia was sold thereby removing asbestos litigation issues. Disposals of surplus property have realised £4.3 million of cash, and the firm ended last year (31 Mar) with £5.3 million of net cash.
Charles Pick at Numis highlights the fact that ‘the FY 13/14 results will represent the fourth successive year of margin, profit and EPS growth achieved by the present Scapa team’. This record has been maintained despite the currency headwinds.
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Scapa’s progress on cash and earnings are being bolstered by its handling of legacy issues.