On 29 January Porvair, the specialist filtration and environmental technology group, announced its results for the year ending 30 November 2017. Revenue at £116.4 million showed a steady increase over the previous year (£109.4m), but still only twelve per cent above that in 2014.
Profit before tax, however, increased to £11.7m, a healthy sixteen per cent increase over the previous year (£10.1m) although, as the company admits, flattered by favourable exchange rates. This is the fifth straight year that Porvair has increased its profit, which is now nearly double what it was in 2012. Earnings per share have also increased strongly to 19.5p (2016: 17.1p), also nearly double the 10.1p in 2012.
Porvair has until now divided its business into two divisions. Metals Filtration designs and manufactures ceramic filters for filtering molten metals in industrial plants, principally aluminium but also iron and special alloys. This division is run through Selee Corporation, a US company based in North Carolina but with a strong presence in China. It was bought by Porvair in 1995.
The other division, Microfiltration, designs and manufactures specialised filters for a range of industries. In aviation it provides filters for the fuel, hydraulic and coolant systems on airplanes, while it is also involved in filters for high temperature gases and nuclear waste.
Another market, soon to be split off into a separate division is Laboratory Supplies. This is based around Seal Analytical, a company that was bought in 2008 and operates in the UK, Germany, USA and China. It designs and manufactures equipment and consumables for chemical laboratories, for example the detection of inorganic contaminants in water is an important niche.
Porvair was formed in 1982 as a management buyout from United Technologies, the US conglomerate. It has grown largely through acquisition. Although its products are specialised it has a wide geographical distribution in revenue, with 54 per cent in the USA and the remainder distributed fairly evenly between the UK, EU and Asia. Revenues are also spread evenly between the different markets, with 40 per cent in Aerospace and Industrial, 30 per cent in Laboratory Supplies, and 30 per cent in Metal Filtration.
The company is thus well protected against temporary downturns in particular markets or areas. The need for well-filtered fluids and laboratory equipment is likely to increase rather than decease. The main threat might come from competition, but it seems that Porvair has good market recognition backed up by good IP.
After two purchases and the expansion of some facilities in 2017, cash on 30 November was down at £9.8m (2016: 13.6m), a reasonable cushion given the profits. Porvair announced an increased final dividend of 2.7p per share, giving an annual divided of 4.2p (2016:3.8p). Share price stands at 523p, after a high of 605p in June 2017, for a market capitalisation of £237million.