Armour Group produced better than expected profits for the year to August 2009.
The consumer electronic products supplier did well to continue to be profitable especially as the automotive-related business was tough.
The majority of the profits come from the home electronics market with the automotive division making a small contribution. The television stands business is becoming increasingly important to the company and the home office furniture range is starting to generate significant revenues.
Overall revenues fell 4% to £51.6m in the year to August 2009. Profits fell more sharply from £3.49m to £1.12m.
Armour has significant buying and sourcing expertise. Chief executive George Dexter reckons that Armour can still buy many items 20% cheaper than Tesco. This helps Armour to maintain healthy margins.
Net debt was reduced from £8.87m to £4.89m at the end of August 2009. The profits were turned into cash and there was a sharp reduction in working capital. Armour still managed to capitalise £1.85m on developing new products during the year. The dividend has been reduced from 0.65p to 0.3p a share.
At 15.25p share, Armour is valued at £10.4m. House broker FinnCap forecasts profits of £1.9m in the year to August 2010, which values Armour at just over seven times prospective 2009-10 earnings.
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