Carclo – 430% increase in earnings, shares now 47.40p, brokers TP increased to 75p – shares up 66% in four months

29.08.2025

I have followed this group for decades, it has had its ups and downs over the years, however it does now seem to be on the upward tack.

This morning Carclo (LON:CAR) announced its Final Results for the year to end-March.

It reported strategic successes that have helped to drive improved operational and financial performance.

The group’s revenue decreased 8.6% to £121.2m, while its underlying operating profit increased by an impressive 48.5% to £9.8m.

The underlying EBITDA was 12.3% better at £16.4m.

Outstanding performance was seen by the 430% improvement in the group’s underlying basic earnings per share at 4.3p.

The group saw cash generated from its operations at a slightly increased by just 2.7% to £19.1m.

Positive moves were made in the group’s debt which was substantially reduced by 34.9% to £19.2m.

Importantly, post the year-end the group secured an expanded three-year £36m financing arrangement.

The Business

Tracing this group’s history takes you back to a company called English Card Clothing.

Card clothing describes a consumable wire product used in the combing of textile fibres prior to spinning.

That company, which was the 1897 combination of four important sector firms, went public in 1946.

In 1924 the Ossett, Yorkshire-based business called Carclo Engineering was established, operating similarly.

The Carclo Engineering Group acquired English Card Clothing in 1979.

In 1997, the enlarged group undertook a series of acquisitions and disposals to progressively focus on higher-growth technical plastics businesses, which were funded through the disposal of the accumulated non-core wire and steel businesses.

Recognising the potential for growth, Carclo embarked on a strategic realignment in 1997, honing its focus on the higher-growth Plastics and Speciality businesses.

Subsequently, that transformative strategy positioned Carclo as a technology-led plastics company, driven by a relentless commitment to precision and innovation, where it now specialises in custom solutions, ensuring the highest quality from concept to production.

The group considers that its strengths lie in Life Science, Aerospace, and LED systems, making it a versatile service provider for intricate needs.

It is dedicated to providing comprehensive high-precision critical solutions, serving as a one-stop shop from initial development through production and assembly, and logistics.

The group considers that its mission is to be the preferred and trusted partner for precision components worldwide, delivering class-leading customer satisfaction through its global presence and technical excellence centres.

Today, Carclo is a leading global provider of high-precision components, offering comprehensive services from mould design, automation and production to assembly and printing, serving the life sciences, aerospace, optics and tech sectors.

The group, which has shown a cyclical performance over the last few years, now seems to be looking forward to years of upward progression.

Management Comment

CEO Frank Doorenbosch stated that:

"I'm pleased to report the meaningful progress the business has made in delivering strong results with improved performance.

We have prioritised health and safety, enhanced our financial position, and fortified our position for lasting and stable growth.

With a clear vision, a robust strategy, and our commitment to our customers and employees, we are confident in our ability to navigate the challenges ahead as a stronger, more resilient organisation.

The strength of our customer relationships and the confidence they have in our business is demonstrated in the recently announced contract renewal with one of our major customers.

We have a clear plan in place and remain focused on the delivery of our strategy and taking advantage of the significant opportunities we have that will drive profitable growth.

With a substantial market opportunity and the progress made, we remain well positioned to realise our exciting potential."

Management Outlook

The strategic actions taken in recent years to turn the business around are bearing fruit and their success is evident in the improved operational and financial performance reported for FY25.

It is considered that the group is well positioned to build upon this positive trajectory, notwithstanding an increasingly complex global backdrop.

The ongoing operational excellence programme and maintenance of the disciplined approach to cash management and the ongoing operational excellence programme are expected to drive sustained financial resilience and strategic flexibility.

Growth in the medium term will focus on accelerating expansion in the Life Sciences sector, where demand for high-precision solutions continues to grow and continued momentum in our Speciality Division, particularly in the aerospace sector.

Strong cash flow performance, an improving net debt position and the new borrowing facility with BZ provide a solid financial platform for this growth.

The group has long-term strategic partnerships with its key clients and the markets for its products are growing.

The strategic changes that have been made have built a strong foundation for sustained performance improvement and it remains on track to achieve its long-term strategic goals.

Management is confident in delivering sustainable profitable growth and enduring value.

Strategic expansion

“Our geographical expansion strategy is one of our key levers for future growth.

We are investing in complex precision injection moulding and fully automated assembly for in vitro diagnostic solutions within our CTP business, while scaling regional capabilities to meet rising demand in India and South Asia.

Our strategy goes beyond replication; we are aligning each new facility to specialised local requirements, targeting opportunities in aerospace, optics, and medical diagnostics.”

The Equity

There are some 73.42m shares in issue.

The larger holders include Schroder Investment Management (19.24%), Janus Henderson Investors (9.88%), Hargreaves Lansdown Asset Management (4.80%), Threadneedle Asset Management (4.35%), HSBC Bank Market Maker (3.72%), Lakestreet Capital Partners (2.99%), Financiere de l’Echiquier (2.97%), First Equity (2.64%), HSBC Global Asset Management (1.56%), and Walker Crips Investment Management (1.24%).

Broker’s View

Analyst Andy Smith, at Panmure Liberum, rates the group’s shares as a Buy, while raising his Target Price from 63p to 75p – compared to the current 47.40p.

For the current year to end-March 2026, his estimates are for revenues of £130.0m (£121.0m), with pre-tax profits of £6.5m (£4.9m), and with earnings per share of 6.6p (4.3p).

For 2027 he looks for £137.0m revenues, £9.1m profits and 9.2p earnings per share.

Jumping forward to 2028, his figures suggest £143.0m revenues, £11.9m profits and 12.1p per share in earnings.

My View

In late April,

I featured this group at 28.50p because I felt that it was beginning to get things right again – a useful 66% improvement.

From today’s statement it is now very clear that Carclo is definitely on the move.

Taking account of the analyst’s estimates, this group’s shares, now at 47.40p, have the potential to double with the next couple of years, and then still look attractive.

(Profile 18.09.24 @ 38p set a Target Price of 50p*)

(Profile 28.04.25 @ 28.5p set a Target Price of 38p*)

Asterisks * denote that Target Prices has been achieved since Profile publication.