Chemicals company Carclo (CAR) intends to resurrect its dividend but investors are in for a long wait. The £106m company isn't promising anything until the full year to 31 March 2019, and even then a decision would depend on the relative health of financial markets and their effect of the company's distributable reserves.
Carclo manufactures moulded plastic components for medical and electronic products, as well as exterior lights for luxury cars.
PAINFUL PENSIONS SQUEEZE
During 2016 the company was plunged into a financial mess as corporate bond yields narrowed in the wake of the shock Brexit referendum outcome. That had the effect of swelling the company's pension scheme deficit which forced management to axe a half year payout worth 1.95p per share despite having already committed to the cash return.
There are strict rules that companies carrying deficit to their pension scheme must adhere to, based on negotiations with scheme trustees.
Since then financial markets have improved, and so has the scale of its scheme arrears, which has reduced from £42.6m to £27m between September 2016 and the full year end, to 31 March 2017.
BETTER TRADING
Trading at the company has also improved. Revenues jumped 16% to £138.3m, partly thanks to weak sterling. That helped spark a firm recovery in profitability, with underlying pre-tax profit up from £8.8m to £11m, which strips out one-off factors.
N+1 Singer analyst Jon Lienard is encouraged by the latest results, particularly in the technical plastics and LED divisions, which enjoyed better-than-expected second halves.
Shares in Carclo are marked 3% higher to 145.5p.
