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UPDATE 1-Fenner says delayed polymer sales hit first-half results
March 11, 2014 / 3:30 PM / 4 years ago

UPDATE 1-Fenner says delayed polymer sales hit first-half results

* Defers advanced polymeric materials sales

* Sees subdued demand from coal miners

* Shares fall as much as 6 percent

By Aashika Jain

March 11 (Reuters) - Fenner Plc said its half-yearly results were hit by a delay in sales of advanced polymeric materials, compounding the effects of subdued demand for industrial conveyor belts.

Fenner’s shares fell as much as 6 percent, making the stock one of the top percentage losers on the FTSE-250 Midcap Index .

Fenner, which will report first-half results on April 23, said its half-year results would be below those for the first half of its previous financial year but the full year would show modest growth in constant-currency terms.

In a trading update for the six months ended Feb. 28, Fenner said some sales from its advanced engineered products (AEP) unit would be deferred to the second half of the current financial year or next year. The company’s financial year ends on Aug. 31.

A company spokesman said the deferrals were mainly in the oil and gas industry and were related to customer issues, not the components that the company supplies.

The AEP unit, which contributes about 40 percent of Fenner’s revenue, makes polymeric products ranging from hearing aid parts to components for wind turbines.

Fenner’s larger unit, which makes conveyor belts for industries such as coal and iron ore mining, generates 60 percent of the company’s total revenue.

The company said it was “mindful” of consolidation amongst makers of heavyweight conveyor belts.

The spokesman noted the recent acquisition of U.S. rubber products maker Veyance Technologies by Germany’s Continental AG , as well as ownership changes at a number of U.S. coal mines.

Investec analyst Michael Blogg said in a note that the Veyance-Continental deal could change the competitive dynamics in some of Fenner’s major markets.

Veyance-Continental will control about 35 percent of the world’s industrial conveyor belt demand once the deal is completed, Jefferies analyst Andy Douglas said in a note last month. Fenner has about 20 percent.

Fenner, based in Hessle, East Yorkshire, generates 97 percent of its revenue from outside of the UK and about 50 percent of the revenue comes from the United States.

FinnCap analyst David Buxton cut his rating on the company’s stock to “hold” from “buy”, citing additional operating costs expected in the AEP unit that would affect short-term margins.

Shares of Fenner were down 5.4 percent at 421 pence on the London Stock Exchange at 1321 GMT.

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