Industrial materials group Cookson (CKSN) beat forecasts with a 45 per cent rise in first-half profit, driven by its ceramics business and the successful acquisition of Staffordshire-based Foseco.
Cookson, which said it was also upbeat about its full-year prospects, made an underlying profit before tax of £99.1 million in the first half of its financial year.
Analysts had forecast figures between £81.7 million to £95.8 million.
Cookson, whose main ceramics business supplies the steel, foundry and solar energy industries, said the acquisition of Foseco, based in Tamworth, had been extremely beneficial to the business.
Following the £497 million takeover of Foseco, which completed in April, Cookson now generates around 75 per cent of its profits from its ceramics business, which is mostly dependent on global infrastructure spending. This has reduced its exposure to its more cyclical electronics and jewellery businesses.
“For the second half, continued growth in the global production of steel, foundry castings and solar panels should support a further strong improvement in the performance of the Ceramics division, benefiting from a full period contribution from Foseco and from our continuing investment in capacity in higher growth, higher margin areas,” Cookson said in a statement.
Cookson proposed an interim dividend of 5.85p a share, up 38 per cent on the year.
Its shares have outperformed the UK general industrials index by eight per cent over the past year. Evolution Securities said the results were much better than expected, with the main difference being the performance of Foseco and the rise in organic growth sales for Ceramics.
The broker has left its forecasts unchanged but added that Cookson clearly has the scope to raise its numbers, which will be further aided by a lower than expected tax charge.
Arbuthnot said while there are some signs of weakness in the expected areas, especially precious metals, the bulk of the business was performing very strongly.
The broker concluded, along with the numbers and the benefit of a lower-than-expected tax rate, it expected to raise its EPS estimates by well over 10 per cent and said its target price is likely to follow.