Clyde's strong order book puts it in 'perfect position'

The Doncaster-based group, which makes pneumatic processing systems for firms ranging from steel-makers to cereal producers, said its order intake has shown consistent growth over the past 18 months.

Yesterday the group said order intake lifted 28 per cent on a year ago to hit 38.5m in the six months to the end of August.

The group's order book, which shows the outstanding value of orders it has yet to complete, was up only two per cent on a year ago to 23.3m at the end of August. However, it hit 26.8m at the end of October.

But shares in the company fell 10.2 per cent to 75p as the group said half-year pre-tax profits almost halved on a year ago to 1.7m, while revenues were down five per cent to 36.5m.

"I don't think the results are bad at all," said chief executive Alex Stewart. "I don't totally understand the (stock) market. Maybe some people are taking some profit.

"The order intake is the lifeblood of the company. The intake is very positive. From that point of view it's exactly what we want."

Mr Stewart said the results were a significant improvement on the previous half-year period – the six months to the end of February, with sales up seven per cent and pre-tax profits up nine per cent. In addition, the six months to the end of August 2009 were boosted by an exceptional contract and a litigation win.

"If you're talking about turning a corner, I guess that's it," he said.

Clyde continues to grow in developing economies, and China now accounts for 13 per cent of its new orders.

But Clyde said its markets have not fully recovered. With the exception of China and India, Mr Stewart said there is little development on greenfield sites. Instead, customers are choosing to 'retrofit' existing sites.

"Capital budgets are not freed up yet," said Mr Stewart. "(But) I believe that the world will come out of this cycle. We're going to be in a perfect position when it happens."

Clyde reiterated its aim of growing the business by acquisitions, possibly by issuing new equity, but Mr Stewart said this may have to wait until after it has reported full-year results.

"We've proved as a team that we can do big acquisitions and make them work and bring synergies out," he said.

"Ideally at some point we would do some again."

The group's net debt increased to 17.7m from 16.3m due to 3m increase in working capital.

Clyde said ending a "salary sacrifice" scheme, plus catching up on delayed contracts, will incur extra costs.

Analysts at house brokers Arden Partners said: "Most important for the group at present is the order book which is now growing strongly."