This article written by John Snowden was published in The IRS Report in October 2010...

Strong progress from industrial exporter

The slow road to an economic recovery in the US may well help Fenner, the industrial conveyer belt maker whose belts are usually associated with the mining industry.

As a leader in reinforced polymer technology, the company is one of the world's leading producers of heavyweight belting using PVC fabric and steel reinforced rubber. Manufactured and designed products include detachable V-belts, thermoplastic belts, precision timing belts, flat belts, image transfer rollers, high temperature hoses, technical fabrics and textile structures, keyless bushings and belt/chain tensioners.

Fenner Advanced Sealing Technologies is synonymous with high-quality, high-performance sealing solutions and consequently enjoys an enviable reputation within the world's fluid power and energy industries. By concentrating on product innovation and service, the company has become a world leader in many niches.

As a result Fenner has had a pretty good recession so far. Having seen an improved momentum during the second quarter of the current trading year, the company came to the market in April with a placing of 17.3m of new ordinary shares at 210p per share to raise a little over £36m.

In July, the company acquired 100% of the capital of MRI Manufacturing and Research Inc, a privately owned corporation based in Tucson, Arizona. The company develops and makes silicone-based devices for medical device companies. Financial details were not released but Fenner did acquire gross assets of $2.6m. The acquisition will also help Fenner to expand its expertise in elastomer engineering and increase its presence in the medical industry.

At the interim stage the company had returned to growth and turned in a strong financial performance with underlying profit before tax increasing by 35% to £16.3m against £12.1m for the comparable period in 2009. Earnings per share increased 28% to 6.4p and net cash generated from operating activities improved by £23m to £24.4m.

The group has benefited from cost reduction activities over the last year and the board felt confident enough to increase the interim dividend by 9% to 2.4p per share. The company, whose year-end is 31st August, is due to report year-end figures during the first half of November.

After the third quarter figures, chief executive Mark Abrahams anticipated full year figures at the top end of expectations as operating profit for the third quarter of the financial year was well ahead of the comparable period last year. This would suggest that the 4.4p final dividend paid last year could be increased, in which case the re-rating of the shares is likely to continue.

A couple of the directors bought shares in the April placing but the company is also well supported by the 11 broking firms which follow events. In fact all of them have posted buy ratings, which must be positive for the approaching results.

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