Sound of tentative grasping of nettles..
Not sure what the new reporting regime is about but not unexpected as new CEO makes his mark.
Happy to sit on the sidelines and watch as market forecasts for 2023/24 are ambitious. |
A reduction in the paper division size with some redundancies, the rest looks fine but really need better informed comment to be made. |
Trading Update and Overview of Strategy |
Any idea to what extent the TFP ans Colourform profitability is reliant on Paper. I.e. are their favourable pricing mechanisms that mean that you can't just split out TFP and expect to retain the same profitability?
Also still think that this isn't at all cheap on a cash flow basis or if we adjust the EV for pension and debt
Eric |
Trouble is Adams will defend the division from whence he came
The paper business is heritage running with machinery from the eighties, previous management did an excellent job in in expanding technical fibres and Colourform and delivering profitable growth but that may be why he was moved on.
If they start investing in the paper business then one will become very nervous |
Profits under real pressure of course but what are their assets worth Profits only one angleGotta be a turn around opportunity now or soon if bottom drawer for future |
Any thoughts on the results?
No real surprises I thought. One thing that did catch my eye was this paragraph:
"The appointment of Steve Adams as CEO, as announced on 10 August 2022, creates an opportunity for a division portfolio review, to ensure we deliver on our short and long term goals as we enter a new phase of growth. As an existing Executive Director of the Company and Managing Director of the James Cropper Paper Division, Steve joined the Company in 2017 and is perfectly positioned to oversee this work, which is already underway."
I wonder if they might actually be thinking about disposing of the paper manufacturing? It's the largest division by turnover but has always been an unreliable profit source. It will, however, probably have a lot of assets so should be worth a bit in a sale.
I think if they did get rid of this and focused on TFP and Colourform we would see a step change in profitability and the attractiveness of these shares to investors. |
Should have gone for Mondi - far, far more forward thinking company |
Ho Hum,it looks like I was a bit premature buying back in after today's profit warning. It's a really tough environment for manufacturers at the moment so maybe I shouldn't be surprised. I still wish they'd ditch paper manufacturing and concentrate on the two growth businesses. |
The only question I have Arthur is the extent to which the TFP profitability is 'clean' versus benefiting from intra-company agreements on sourcing costs. In other words, if you took TFP out, does it need to move to arms-length contracts on any cost lines that make the P&L today distortedly high (and which in turn could materially impact how to think about the valuation multiple for the business).
That's a genuine question as I don't know the answer, but it's something I'm mindful of when doing divisional analysis. So if anyone knows, I'd love to know!
Eric |
I also bought back in. I think TFP is worth the market cap on its own with the paper manufacturing and Colourform thrown in for free. If paper can remain profitable throughout this year then I expect a really quite good set of results in 2023. |
Well about time they wrote something positive, hold and added a little on weakness.
Illiquid. |
Impressive update all round so finally taken a position. |
Quality company that it is, it is hard to see a floor for this one given the uncertainty and elevated rating. Like you Arthur I want to buy in at some point but just don't see what price represents good value. £6? |
The investors' Chronicle have called this a sell.
I actually disagree somewhat and would like to buy but hopefully they will get cheaper before things get better. |
Massive tax rate (51%) has decimated bottom line earnings despite a 33% uplift in revenue and only a reduction in exceptionals (primarily the restructuring costs) ramped up pbt.
Energy costs more than doubled.
On a current PE of 72x…….I must be missing something!. |
Ok results, interesting company. I noted the large increase in raw material costs which they have navigated reasonably well. Also the new undrawn borrowing facility. Need to get profits up to drive eps imo. |
I agree it doesn't look cheap as a whole, but the divisional breakdown when it comes should give a clearer picture of the value in these. I expect TFP to make hefty profits but to be dragged down by losses in the growing Colourform and paper manufacturing. |
Thinking like you Arthur but just feel it is a fairly weighty valuation with a p/e of 30 plus in such uncertain times. |
I'm giving some thought to buying back in. TFP has to be worth £100m on its own surely?
I wish they would sell the paper manufacturing and concentrate on the growth areas though, I guess the family must be emotionally attached to it. |
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