Industry demand keeps Fenner’s shares on a high

The 151-year-old group, based in Hessle near Hull, said operating profits during the six months to the end of February were significantly ahead of the same period a year earlier.

“As the group enters the second half of its financial year, healthy order book levels support our expectation of continued positive trading,” said Fenner.

Shares in the engineer rose as high as 505p – a 10 per cent gain – before settling to close the day at 483.7p, up 5.2 per cent or 24p.

Fenner said net debt remains in line with its expectations, after paying for acquisitions and other investment.

“Fenner has experienced positive trading conditions, supported by steadily growing demand from the mineral extraction/energy sectors, and market share gains,” it said. “Operational efficiencies that were seen in the second half of last year have driven improved margins.”

Fenner, which trades through a conveyor belting division and an advanced engineered products arm, said it made good strategic progress during the six months, helped by acquisitions. It has been snapping up firms which extend its services in the after-sales market, allowing it to support customers through the lifespan of a piece of equipment.

The purchase of Allison Custom Fabrication in December expanded its conveyor belting reach in North America. Buying Multiseals helped its ability to support oilfield customers globally, and Transeals improved its services to the Australian market.

Fenner, headed by chief executive Nick Hobson, said it has increased capacity in its medical textiles and oil and gas products businesses. It has also committed funds to add conveyor belting capacity. Fenner’s shares have rebounded strongly since hitting a low of 32p in March 2009, driven by the booming markets of China and India.

Investec analysts said: “We are conscious the stock has had a strong run over the last few years, on the back of meaningful upgrades, but do not believe we are turning positive at the top. We think the stock has further to run over the next 12 months.”