Armour Group is set to remain profitable this year even though the consumer electronics and automotive accessories markets will be tough.
Sales dipped by 2% to £54m in the year to August 2008, while pre-tax profit fell from £4.5m to £3.49m.
Despite exposure to the housing market the consumer electronics division has held up well. The decline in profits came from the automotive side.
House broker FinnCap has slashed its 2008-09 profit forecast from £3.5m to £1.65m. Given the state of Armour’s markets, that would be a decent performance. An unchanged dividend of 0.65p a share would still be nearly three times covered by earnings.
Net debt is £8.87m and this is forecast to fall to £7.7m by the end of September 2009 thanks to cash generated from operations. Armour has a bank facility with an attractive interest rate that will last until 2011.
Armour shares fell 1.5p to 9p each, which values the company at £6.16m. The shares are trading on less than five times prospective earnings and yield 7.2%.
Chief executive George Dexter believes the tough economic conditions will help to reduce competition and Armour may be able to pick up distributorships from those competitors.
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