British Polythene Share Discussion Threads

[napoleon 14th] 07/3/2011 07:32

"RNS Number : 4019C

British Polythene Industries PLC

07 March 2011

7 March 2011

BRITISH POLYTHENE INDUSTRIES PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

Sound results despite significant increase in raw material prices

Highlights

-- Sales increased 12.5% to GBP478m (2009: GBP425m)

-- Operating profit before net restructuring of GBP17.9 million (2009: GBP19.0m) impacted by substantial increase in raw material costs

-- Diluted earnings per share, before net restructuring, of 38.31p (2009: 38.60p). Diluted earnings per share of 51.07p (2009: 30.36p)

-- Profit before tax up to GBP16.7m (2009: 11.8m)

-- Net borrowings reduced by GBP6.6m to GBP45.6m

-- Final dividend increased to 7.85p (2009: 7.5p), making a total dividend for the year of 11.5p (2009: 11.0p)

-- Good start to the year although 2011 will not be easy

Commenting on the results Cameron McLatchie, Chairman of BPI, said:

"2010 showed evidence of further improvement in the underlying performance of our business.

Despite increases in raw material costs of some GBP45 million, operating profits were only GBP1.1 million less than 2009. The Board is encouraged by this very satisfactory performance in difficult circumstances and are recommending an increase in the dividend for the year.

We are confident that the actions that have been taken over the last few years have put our business in a better position to weather the current economic climate and also to be able to take advantage of any upturn in the economy. 2011 will not be easy, but we have made a good start."

_______________________

I don't get the eps bit; 51.07p before restructuring, 38.3p net of restructuring, surely?

Still, only a P/E of 6.16 in the worst scenario...
Yield 4.9% is sweet too.

[napoleon 14th] 07/3/2011 07:26

That's an honest set of results, good eps & a P/E of c.6;
No nasties, restructuring finished, good start to 2011.
Hardly a risky share to hold, but I doubt they'll set the world alight in 2011.

I would like to see BPI & their competitors adjust prices to factor in POO increases. Still, POO itself might not stay this high anyway, just long enough to justify another rise at the pumps!

[napoleon 14th] 07/3/2011 07:26

That's an honest set of results, good eps & a P/E of c.6;
No nasties, restructuring finished, good start to 2011.
Hardly a risky share to hold, but I doubt they'll set the world alight in 2011.

I would like to see BPI & their competitors adjust prices to factor in POO increases. Still, POO itself might not stay this high anyway, just long enough to justify another rise at the pumps!

[napoleon 14th] 07/3/2011 07:24

That's an honest set of results, good eps & a P/E of c.6;
No nasties, restructuring finished, good start to 2011.
Hardly a risky share to hold, but I doubt they'll set the world alight in 2011.

I would like to see BPI & their competitors adjust prices to factor in POO increases. Still, POO itself might not stay this high anyway, just long enough to justify another rise at the pumps!

[spaceparallax] 05/3/2011 10:57

I think oil price is really beginning to bite i.e. whilst the forthcoming results should be fine, the outlook may be worrying with commentators talking even of $200 oil.

[napoleon 14th] 04/3/2011 11:50

I've hung on in here.

Been watching the chart closely tho', as it's near/on support, & a break thereof would see me out asap.

Granted POO is a factor in costs, but it is for the competition too, & IMO they'll all adjust their prices if it gets beyond the tolerable.

Still, roll on March 7th; we could be in for a pleasent surprise, tho' I've seen no pre-results rise.

[spaceparallax] 02/3/2011 14:42

7 March I think.

[s34icknote] 02/3/2011 14:38

Hi all,
When are results due ?

[spaceparallax] 23/2/2011 08:51

I honestly don't know what the input costs are - but I'd be surprised if the production cost in total amounts to 50% and that would include a whole lot more than the oil related elements. It's certainly fair to acknowledge that the raw material costs will be significantly higher, but I'd be surprised if that equated to more than 1 or 2% of the sales price. The Company have acknowledged it as a pressure, but equally have confirmed in line with expectations.

All that said, we each must make a decision and I can't blame the likes of Fenners, who's clearly nervous, getting out - that would explain the recent dip. However, the more recent rebound suggests that the mkt is taking a more measured view.

[costanz] 22/2/2011 20:23

Fenners - material input costs are only one input into the overall cost of sales (although I admit a significant one). Not sure how you get some of your amounts either.

Firstly, sales of £461m does not indicate cost of goods sold of £461m. Therefore, to take total sales, assume half of that represents the cost of polymers solely and to then attribute the entire price rise as a cost unable to be passed on for a year is ridiculous. If you look over the past years financials, the reasons sales have been increasing is partly due to increased volumes, but also due to increased selling prices.

Raw material input costs is not an unforeseen issue, and BPI have been raising this for the past two years. They alluded to this in the 2010 interims and latest update, and therefore when entering into fixed term contracts would of taken this into account.

While input costs are working against BPI, factors in their favor include the weakness of Sterling, restructuring now aligned to capacity and over two thirds of business relating to sectors which have had a minimal impact from the GFC.

I would be careful shorting without tight stops in place.

[fenners66] 22/2/2011 19:18

I'm guessing material input costs represent 50% of sales (say).
So on forecast sales for 2011 of 461m that 7% jump is £1.3m straight of the bottom line every month until passed on. If that takes 12m the it costs £16m, that's a full years profit!
I'd say there are reasons to go short until materials input price falls again....

[spaceparallax] 17/2/2011 14:19

Good to see the share price rebounding nicely as the mkt returns to a rational view of the input costs vs the current meagre PER.

[envirovision] 17/2/2011 09:27

Even without fixed contracts, passing on input costs is often very difficult. You cant just jack up your output price as soon as input prices rise. Your customers would drop you in a flash in favour of someone cheaper.

There will always be another producer somewhere in the world with larger inventory who can dodge the effects for far longer. Increasing output costs is normally a slow and painful process fraught with difficulties. Some sectors can take many months and even years before the normality and equilibrium is restored.

[spaceparallax] 17/2/2011 08:42

I don't doubt that's true - a problem that'll presumably affect the whole sector.

[tommydog] 16/2/2011 21:52

s34icknote - 748 of 749

BPI have many fixed price contracts for 12 months. On many occasions they have little or no chance to pass on raw material increase costs to the customer unless they are prepared to break contracts & risk losing the cusotmer in what is a very competitive/challenging marketplace.

[spaceparallax] 16/2/2011 13:32

"Trading remains consistent with that described in our Interim Management Statement of 15 November and we, therefore, expect our results for the year to be within the range of current market expectations. "

A straight lift from December's TS.

[s34icknote] 16/2/2011 13:19

Will the rising costs not be passed on to the consumer ?

[envirovision] 16/2/2011 10:48

dec they said Raw material costs and availability continue to be an issue and our suppliers are seeking further increases for January

we know Feb has been even worse and we know the trend wont reverse and could even get worse..look whats happened to cotton up 800%

The market does not like a comapny with a shrinking outlook.

Right now the forecast was for eps 44p for 2011.

OK maybe it should be 35p now based on 2011 and you could say thats overdont at £2.40 shareprice.

But the problem is that the FY results will contain bad news and theres little good they can really say, not their fault really.

So no I suspect its not priced in yet.

I will wait for results and keep my eye on the dividend and cover.

Thats what would tempt me right now, nothing else.

[s34icknote] 16/2/2011 10:06

Hi Envirovision

Do you think this is already priced in ? As most shares have recovered and bpi have lagged and still on low pe ?

[envirovision] 15/2/2011 19:57

s34icknote - 15 Feb'11 - 19:49 - 744 of 744

how do you think this effect eps ?

Fairly simple really, constantly rising input prices = constant battle to try to pass on costs, in short massive margin squeeze = lower profits = lower eps.

[s34icknote] 15/2/2011 19:49

how do you think this effect eps ?

[envirovision] 15/2/2011 14:15

plastic prices showing no slow down, up 7% on the month.

ouch.

[envirovision] 15/2/2011 14:15

plastic prices showing no slow down, up 7% on the month.

ouch.

[spaceparallax] 27/1/2011 14:56

roll-on 7 March - results should be good and we'll also develop a clearer picture of the input costs situation.