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Smiths News - Large contract renewals boost prospects

July 2013

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • NWS
  • Price:
  • 164p
The main take-away from interim results, which showed underlying pretax profit and eps increasing a sparkling 16% to £24.9m and 10.3p respectively, is that Smiths is over half way to its target of generating 50% of profits outside of its legacy supply chain business. This side, which distributes newspapers and magazines to 30,000 retailers across the UK, reduced like-for-like sales almost 4%, with a rise in cover prices partially mitigating declines in volumes, but efficiency measures drove a modest 2.6% rise in operating profit to £19.7m. Encouragingly, Smiths has removed the Sword of Damocles, which had been hanging over it, by renewing contracts worth over £350m p.a. in the period and since then it has renewed a further c £137m p. ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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