My memory may well go back a lot longer than the majority of my readers – but then I am very old.
Having first worked in stockbroking way back in 1963, one of my early jobs was to sort through, and then file away, the daily input of Exchange Telegraph cards profiling the latest news from UK-listed companies.
So, my grey cells went into action recently remembering details about the English Card Clothing business.
The Huddersfield, Yorkshire-based business, had centuries of history within the textile sector.
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.
The Business Now
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 had its ups and downs over the last few years, now seems to be looking forward to years of upward progression.
In mid-July when releasing the end-March 2024 Final Results, CEO Frank Doorenbosch stated that:
"Carclo has undergone a lot of change and adaptation in the last year.
We have faced difficulties, but we have also prioritised health and safety, enhanced our financial position, and fortified our position for lasting and stable growth.
Looking to the future, our strategy will centre on reigniting our innovation engine.
We will focus on enhancing product development, refining processes, and investing in our talented team.
The strategic closure of our short-run operations in Derry and the consolidation of assets and talent in Pennsylvania will streamline our operations and drive innovation.
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 and appear as a stronger, more resilient organisation.
The future holds great promise for Carclo, and we are excited to embrace the opportunities that lie ahead."
Analyst View
Andy Smith at Panmure Liberum rates the group’s shares as a Buy.
His estimates for the current year to end-March 2025 are for revenues of £133.0m (£133.0m), with pre-tax profits of £2.4m (£1.0m), and earnings of 2.5p (1.1p) per share.
However, the big turn around comes over the next two years, with his 2026 estimate of £146.0m sales, £5.2m profits, with 5.2p earnings.
For the period to end-March 2027 he sees £161.0m revenues, with £8.3m profits and 8.4p per share in earnings.
My View
As I see it, having risen from 6p in April to a recent 42p High on Tuesday of last week, Carclo's recent share performance, though currently affected by high bank debt and a UK pension deficit, stands as a testament to its resilience and determination to overcome challenges.
Based upon the broker estimates, I set a Target Price of 50p for the shares, now 38p, capable of being scored before next summer.
(Profile 18.09.24 @ 38p set a Target Price of 50p)
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