News blog

William Sinclair

  • BY: Andrew Hore |
  • POSTED: 02/10/2012 |

Poor weather hit the peat harvest and William Sinclair will make a modest profit for the year to September 2012.

The wettest summer for a century made it difficult to harvest peat and also hit consumer demand with the main markets slumping by nearly one-fifth. There have been problems across Europe and the shortage of peat means that retail prices could rise by up to 15%.

Pre-tax profit is forecast to fall from £3.2m to £200,000. A sharp fall was already anticipated but this is worse than envisaged at the time of downgrades earlier in the year.

A 25% rise in prices to the UK professional sector could hit demand and knock Sinclair’s revenues in the year to September 2013. House broker WH Ireland has cut its 2012-13 profit forecast from £2.5m to £2m.

On the bright side, demand for peat alternative SuperFyba is expected to grow and production starts at Ellesmere Port in November.

Sinclair says that its final dividend will be lower than the 4.4p a share paid last year. The interim dividend was increased from 1.8p a share to 1.9p a share but the total dividend is expected to fall from 6.2p a share to 4.5p a share. That represents a yield of more than 3%.

Bernard Burns is stepping down as chief executive and he will leave when his replacement is chosen next year. However, he will continue to be responsible for the Bolton Fell compensation claim. Analysts believe Sinclair could get £20m in compensation from Natural England for the closure of Bolton Fell peat moor but the offer was £12m, of which £9m has already been received by the company. The dispute is likely to be referred to the Lands Tribunal.

The result of an appeal for planning permission to harvest peat at Chat Moss has been delayed until later this year.

At 148p a share, down 14.5p, Sinclair is valued at £25m. The shares are trading on 17 times prospective 2012-13 earnings.

The full year figures will be announced on the 3 January.

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