Demand rolling in for conveyor belt manufacturer

The global leader in heavyweight conveyor belting said after the recession dampened orders and hit profits, it has seen operating profits increase over the past four months.

Fenner, which has its headquarters in Hessle near Hull, said the cold spell is also likely to boost earnings, but added it was too early to say how much by.

"We're back on the front foot and moving back into growth. Things are moving along positively," said chief executive Mark Abrahams after

yesterday's annual shareholder meeting.

Analysts at Numis Securities raised their pre-tax profit forecast for the year to the end of August by two per cent to 37m, while analysts at KBC Peel Hunt upped theirs by five per cent to 38.9m. "I'm comfortable with what the analysts are saying," added Mr Abrahams.

Fenner, whose conveyor belts are used in industries from mining to electronics, said it continues to win market share as customers come to the end of depleted stocks and place urgent orders.

"We are noticing people are ringing us up and needing things more urgently than normal," said Mr Abrahams. "For the most part we can meet this (need). That's why we are taking market share."

Fenner said revenues from the mining sector have been "robust", with a boost from the cold weather.

"At the end of the day people burn more coal when it's cold and they use more conveyor belts," said Mr Abrahams. "It's very early days (but) I can only see it as good news."

The group added net debt is marginally lower than expectations, thanks to strong cash generation. Analysts put the figure at about 150m.

With fewer capital intensive projects on the horizon, Fenner added it has scope to generate "substantially greater" cash flow. Cost cuts, including hundreds of job losses, have also helped to improve returns, it said.

December is typically a quiet month for Fenner, but yielded better-than-expected profits and growing order books, adding to the group's optimism. "Revenue declines have slowed but, more importantly, operating profit has increased," it said.

Fenner believes its global spread should give it access to the staggered recovery around the world. As well as plants in the UK and Europe, it has operations in China, the United States, India, Australia and South Africa.

"There's going to be a recovery in some parts of the world," said Mr Abrahams, pointing to growth in Asia/Pacific and slow underlying growth in the US. "There's enough momentum that I expect Fenner to keep moving forward."

Nick Webster at Numis said: "Fenner's statement indicates a good first four months' trading and confirms recent positive trends in its core markets.

"With further cost benefits to come, and operational efficiencies from its acquisitions and capital investment programme, the outlook looks increasingly positive."

Analyst Jonathan Hurn at KBC Peel Hunt said: "There is more to come from Fenner."