By Julian Singer

In February Porvair, the specialist filtration and environmental technology group, presented a good set of results for its financial year to the end of November 2019. The revenue was a record high at £144.9 million, up thirteen per cent from 2018, while profit before tax was also a record at £14m, up nine per cent from 2018. As a result basic earnings per share rose from 22.1p in 2018 to 23.6p.

Filters are required in many industries, in fact any that uses fluids such as fuel, water, air or molten metal. Porvair has been expanding steadily since the 1980s by buying small companies with special filters for particular industries. In 2008 it also expanded, by acquisition, into the manufacture of instruments and consumables for use in environmental and bioscience laboratories. It has been able to finance these investments and the dividends mainly from cash generated, with only modest borrowing. As a result the company has increased its profit before tax for every one of the last ten years.

It is now organised into three divisions: Aerospace and Industrial (revenue £65m in 2019, at a profit of £8.2m), Laboratory (£44m and £6.4m) and Metal Melt Quality (£39m and £2.8m). It is spread wide geographically with plants in the UK, USA, Germany, the Netherlands and China. Revenue is split likewise, with 50 per cent in the Americas, 23 in Asia, 15 in Continental Europe, 11 in the UK and 1 per cent in Africa.

Image by Philippe Delavie from Pixabay

Commenting on the outlook Ben Stock, Chief Executive, said “The Group is positioned to benefit from global trends: tighter environmental regulations; growth in analytical science; the expansion of air travel; the replacement of plastic by aluminium; and the drive for manufacturing process efficiency….. The Group is looking forward with confidence”.

That was in February. What now after the ravages of Covid 19? At first glance one would suspect the worst. Any company connected with the aerospace industry is suffering very badly; environmental regulations are not at the top of the agenda; and plastic use has increased strongly with increased home deliveries.

However in a trading update dated 8 April Porvair announced that business was not so bad. Revenues to the end of March were ahead of the previous year with all plants operating and with extra shifts in some factories (this was, of course, before the major effect of the virus).  After stress testing various scenarios the company believed it would not need to change its final dividend.

It turns out that Porvair’s products are of considerable use in the crisis. Ventilators and breathing apparatus both use filters, so the company has been supplying several consortia building this equipment in France, Sweden, the US and the Mercedes AMG/Formula 1 consortium in the UK.  It is also supplying consumables for dozens of US testing laboratories, producing millions of pipette tips for testing kits and thousands of filters.

Although positive the overall impact of this extra work on Porvair’s balance sheet will be small, as many of its other segments will be suffering badly. However with its healthy balance sheet the company should be able to bounce back strongly. Its shares are trading at 640p, not much down from the all time of 786p in January. Market capitalisation is £287m.