Somero Enterprises Inc. (DI) (SOM)

Sector:

Engineering

Index:

FTSE AIM 100

327.50p
   
  • Change Today:
    -2.50p
  • 52 Week High: 378.00
  • 52 Week Low: 257.00
  • Currency: UK Pounds
  • Shares Issued: 55.13m
  • Volume: 39,115
  • Market Cap: £180.54m
  • RiskGrade: 192

Somero still profitable amid Covid slowdown

By Josh White

Date: Friday 05 Jun 2020

LONDON (ShareCast) - (Sharecast News) - Somero Enterprises updated the market on its trading on Friday, as well as the precautionary actions it was carrying out in response to the Covid-19 pandemic.
The AIM-traded firm said that, while it remained in a "strong" financial position, it was implementing a range of further precautionary actions to reduce costs and conserve cash during this period of uncertainty.

It put that down to the difficulty in determining the implications and duration of the pandemic.

The board said it remained confident in the health of the business and its growth prospects over the long-term, explaining that it was taking actions now to ensure it was in a strong position once the operating environment became more normal.

Thus far, the concrete placement technology company said it had furloughed about 20% of its workforce, and cancelled all bonus and profit-sharing payments for the calendar year 2020, affecting all Somero employees not on sales commission plans.

It had also curtailed discretionary spending across all departments, as well as further capital expenditure beyond what had already been committed to ongoing building expansion projects.

The company said the annualised pre-tax impact of those cost saving measures was expected to be about $5m (£3.95m).

"Somero entered this period of uncertainty with a strong balance sheet and good liquidity and its financial position has been strengthened further by these additional financial and cost saving measures," the board said in its statement.

On 30 March, it said its net cash position then was more than $24m, and on Friday it said it expected its net cash position on 30 June would still be more than $24m, adding that it had access to "substantial" additional liquidity through its $10m line of credit.

"In addition, the company will continue to closely monitor, and pursue as applicable, all US government funding opportunities for which the company may be eligible."

Somero said that, even though the Covid-19 pandemic had resulted in current trading falling around 25% below levels required to achieve its previous market expectations of $90m in 2020 revenues, it was still profitable and cash generative.

"The board is confident that, following the actions taken by the company described above, the company would continue to be cash generative even in the scenario where revenues fall an additional 20% from current levels, to approximately $54m, which provides management substantial flexibility during this challenging period."

Uncertainty around the scale, duration and impact of the pandemic on Somero's end markets in the non-residential construction industry made it difficult to provide further guidance on financial performance in the rest of 2020 and beyond, it added.

It said that, while extended project backlogs reported by customers prior to the pandemic - particularly in the United States - indicated the non-residential construction market was "active and healthy" entering this period, financial performance for 2020 and beyond would depend on a number variables over which the firm had no control.

"Somero's operating model enables the company to adjust quickly to changing conditions, protect profitability and preserve its strong financial position.

"In addition, it is important to highlight that the cost saving actions taken by management are specifically designed to not impact investment in new product development, a key element to the Company's long-term growth strategy.

"In fact, new product development activity remains at the high level seen in recent years."

Somero said the "range and depth of impact" from Covid-19 created significant short-term uncertainty, but its board said it was confident in the health of the firm and its long-term growth opportunities.

"The company is positioned well to withstand impacts from Covid-19, benefitting from a strong financial position, a flexible operating model, and a continued pipeline of new products to fuel growth, until such time as non-residential construction activity reverts to more normalised activity."

At 1313 BST, shares in Somero Enterprises were up 0.47% at 212p.

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Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

Note 2: RiskGrade figures are provided by RiskMetrics.

 

SOM Market Data

Currency UK Pounds
Share Price 327.50p
Change Today -2.50p
% Change -0.76 %
52 Week High 378.00
52 Week Low 257.00
Volume 39,115
Shares Issued 55.13m
Market Cap £180.54m
RiskGrade 192

SOM Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
84.46% above the market average84.46% above the market average84.46% above the market average84.46% above the market average84.46% above the market average
87.88% above the sector average87.88% above the sector average87.88% above the sector average87.88% above the sector average87.88% above the sector average
Price Trend
21.08% above the market average21.08% above the market average21.08% above the market average21.08% above the market average21.08% above the market average
8.57% below the sector average8.57% below the sector average8.57% below the sector average8.57% below the sector average8.57% below the sector average
Income
76.63% above the market average76.63% above the market average76.63% above the market average76.63% above the market average76.63% above the market average
64.71% above the sector average64.71% above the sector average64.71% above the sector average64.71% above the sector average64.71% above the sector average
Growth
79.53% below the market average79.53% below the market average79.53% below the market average79.53% below the market average79.53% below the market average
87.88% below the sector average87.88% below the sector average87.88% below the sector average87.88% below the sector average87.88% below the sector average

SOM Dividends

  Latest Previous
  Final Special
Ex-Div 11-Apr-24 11-Apr-24
Paid 10-May-24 10-May-24
Amount 13.19¢ 7.40¢

Trades for 03-May-2024

Time Volume / Share Price
16:19 10,000 @ 325.00p
16:14 4,000 @ 322.40p
16:11 575 @ 322.35p
16:11 1,920 @ 326.24p
14:27 600 @ 326.24p

SOM Key Personnel

CEO Jack Cooney
CFO Vincenzo LiCausi

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