CCT hikes dividend 29% despite 5.5% fall in revenue & 17% fall in profits
Companies: Character Group plc
Character Group saw underlying operating profits fall 17% in the first half of the year after higher purchasing costs and challenging market conditions hit revenues.
Despite this, the firm's net cash position strengthened considerably to £18.6m from £14.6m, which supported its decision to hike its interim dividend 29%. The comparative period in 2016 was also a record H1 for the Company.
The Group reported revenues of £61.5m, about 5.5% lower than last year, and underlying operating profits of £7.1m. It said that gross profit level was "holding well" despite increased costs due to currency headwinds.
Broker Panmure Gordon said CCT had delivered the results against the combined backdrop of a very tough comparative period and challenging UK context, adding that it believed the standout feature was net cash generation:
"This reminds us of one of CCT’s key investment attractions; the highly attractive financial model with low capital intensity provides the capacity for significant cash generation, in turn supporting a progressive dividend policy and the continuation of the multi-year share buyback programme."
Panmure made no changes to its "conservatively framed" FY17, 18, and 19 pre-tax profit forecasts, and reiterated its BUY rating with a target price of 635p, implying 34% upside.
Operationally, the firm said its core products (Peppa Pig, Little Live Pets, and the Teletubbies) continued to have brand strength, while the recently launched Stretch range has emerged as one of its top brands.
"In a period where a number of macro-economic factors, particularly the weakness of sterling have worked against us and considering the backdrop of an exceptional period of growth experienced in the comparative period last year, our core brands have continued to perform well."
The board said it was confident of the business' current outlook as it hiked the interim dividend to 9p per share, a 28.6% increase Yoy.
Character Group shares fell 1.3% on Thursday morning.
