Small cap round-up
Funeral provider Dignity posted a drop in profits on Monday as it continues to battle competition in the market.
In the 39 weeks to 28 September, revenue rose to £244.2m from £243.9m but underlying operating profit declined 14% to £68.6m as the number of deaths ticked up 3% to 455,000.
In the funeral division, underlying operating profit in the third quarter fell to £11.1m from £15.3m in the same period a year ago, while profit in the crematoria business was flat at £8.8m.
The company said the third quarter saw a drop in average income "as a consequence of the ongoing pricing trials". Although it did not mention it specifically, this was most likely a reference to the Co-op's announcement earlier in the year that it was cutting the cost of its funerals by £100.
Dignity said its funeral market share continued to show "good" momentum in the third quarter. It performed 55,700 funerals in the first 39 weeks of the year versus 52,100 in 2017, representing a market share of 12.1% versus 11.7% the year before.
The group said it continues to expect average income to be lower in the fourth quarter of 2018 but it continues to perform in line with current market expectations for the year ended 28 December.
Chief executive Mike McCollum said: "We are pleased with how the group has performed in the period and following these results our expectations for the full year remain unchanged. Our work on the transformation plan is critical and we are encouraged by the progress that has been made in the initial weeks.
"Alongside the expansion of our digital offerings, we continue to provide a greater choice for consumers and our focus on high standards and excellent client service remains central to our plans for the future. The group's significant research projects highlight the need for minimum professional standards and support calls for regulation that we have been making for some time."
Agriculture and engineering group Carr's reported a jump in full-year profit and revenue on Monday thanks to a strong performance in UK agriculture, with growth across all areas.
In the year to 1 September 2018, pre-tax profit rose 45.2% to £16.6m on revenue of £403.2m, up 16.5% on the previous year. Operating profit increased 44.4% to £17.5m and adjusted earnings per share came in at 13.9p, up 56.2% on 2017.
The performance was ahead of the board's expectations, with both the company's divisions benefitting from investments made in previous years, particularly the acquisition of NuVision, as well as a recovery in UK manufacturing business and improvements in underlying markets.
Carr's said UK Agriculture continued to perform strongly, reflecting improved farm incomes and higher levels of farmer confidence. In the USA, cattle prices improved steadily during the year supporting a recovery in USA feed block volumes, which were significantly ahead of the prior year.
Meanwhile, UK feed blocks performed in line with expectations while European feed block sales volumes through its joint venture business based in Germany, Crystalyx Products GmbH, continued to grow.
The engineering division delivered a "significantly improved" financial result compared to the prior year, with a strong recovery in the manufacturing business and a significant contract announced in July 2017 performing as expected.
Chairman Chris Holmes said: "Trading for the new financial year has started in line with the board's expectations. We made further progress during the year on our strategic objectives and continue to believe the breadth of our product offering, investments in acquisitions and research, and our international footprint leaves us well positioned for further growth across both our divisions in the medium term."
Carr's said it remains confident in the prospects of the UK agriculture business in the near term following the sustained recovery in farm incomes.
"While we now have greater visibility in relation to farming support post Brexit, we remain cautious over the nature of future trade agreements with the EU and the rest of the world. We expect the gradual recovery in USA cattle prices to continue in the current financial year, which, together with the acquisition of Animax and expansion into other geographic markets, provides a solid base for growth in the agriculture division."
At 1550 GMT, the shares were up 4.5% to 163p.
Shore Capital analyst Phil Carroll said: "We believe Carr’s is in good position benefiting from the investment made in prior years and ongoing investment today.UK Agriculture looks to be in broadly a good place with the added visibility on farming support over Brexit being welcome news whilst the improved engineering backdrop provides a significant opportunity for the group."
He rates the stock at 'buy'.