FW Thorpe

23 March 2021
By Maynard Paton

Results summary for FW Thorpe (TFW):

• “Resilient” figures that showed both profit and dividend up 2% despite the pandemic, Brexit and a factory fire.

• Management’s previously gloomy tone has improved and the second half is now expected to witness a “steady” performance.

• Expectations seem pinned on TFW’s Dutch divisions, where profit gained a remarkable 15% and progress generally within the group has been positive.

• The cash hoard improved further to a record £65m, but the group margin still languishes below the healthy 18%-plus level of the past.

• A P/E of 22-29 feels generous, although might reflect TFW’s operational reliability, opportunities for market-share gains and/or potential growth beyond lighting systems. I continue to hold.

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23 October 2020
By Maynard Paton

Results summary for FW Thorpe (TFW):

• “Creditable” figures that revealed second-half profit sliding 17% due to the lockdown.

• A 2% final dividend lift, cash reserves of £63m plus the commendable funding of furloughed staff did not imply imminent financial difficulties.  

• The SmartScan light-monitoring system provides exciting potential, with sales up 18% to represent 23% of total revenue. 

• Talk of a “global recession” and a “downturn in orders” suggests trading during 2021 will be challenging.

• A P/E of 21-25 seems generous but may reflect the ‘pandemic-proof’ balance sheet, SmartScan growth and/or resilient profit history. I continue to hold.

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18 May 2020
By Maynard Paton

Results summary for FW Thorpe (TFW):

• Acceptable 7-9% first-half growth, although profitability has essentially stalled for the last 2-3 years as the LED mini-boom subsides.

• A 2% dividend lift, net cash and investments of £47m, a “strong” order book plus an outstanding response to government assistance do not imply immediate Covid-19 problems.

• However, trading is not perfect, as margins at the largest division continue to decline while overseas cross-selling progress remains slow and small. 

• The SmartScan light-monitoring system could be a ‘hidden gem’, with sales up 50% last year to represent 20% of total revenue.

• A P/E of 22-25 feels warm, but may reflect the ‘pandemic-proof’ balance sheet, SmartScan potential and/or resilient profit history. I continue to hold.

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18 October 2019
By Maynard Paton

Results summary for FW Thorpe (TFW):

• “Ongoing economic uncertainty” caused by Brexit led to flat sales and lower profit. 

• Talk of a “healthy order book” provides hope that trading won’t deteriorate into 2020. 

• Comments concerning new products imply slowing LED growth and a plucky move into non-lighting applications.

• Accounts boast enormous £57m cash hoard that could be used for acquisitions — or (fingers crossed) further special dividends.

• Underlying P/E of 19 seems optimistic given recent progress. I continue to hold.

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29 March 2019
By Maynard Paton

Results verdict on FW Thorpe (TFW):

• Lower revenue and profit due to “challenging trading conditions” caused perhaps by the collapse of Carillion.

• The statement’s highlight was management talk of orders having returned to “record levels”.

• Fresh product developments continue and include “radical” new range of workplace lighting.

• Accounts showcase huge £53m cash pile while dividend on course for 17th consecutive annual increase. 

• Underlying P/E of 21 seems optimistic given recent progress. I continue to hold.

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21 September 2018
By Maynard Paton

Update on FW Thorpe (TFW).

Event: Preliminary results for the twelve months to 30 June 2018 published 20 September 2018.

Summary: The specialist lighting manufacturer delivered its fifth consecutive year of record results, although describing an underlying 2% profit advance as “excellent” overplayed the performance somewhat. Still, the figures were a touch better than I had expected and showcased all the usual financial attractions — decent margins, vast surplus cash and robust reinvestment returns. Sales of some new high-tech products apparently “rocketed”, too. That said, TFW suffered mixed divisional performances while the share-price rating remains rich. I continue to hold.

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16 March 2018
By Maynard Paton

Update on FW Thorpe (TFW).

Event: Interim results for the six months to 31 December 2017 published 15 March 2018

Summary: These first-half figures actually set new H1 records, but they also confirmed TFW’s good run of double-digit profit growth will pause during 2018. Pressure on prices for tunnel lighting was cited as one reason for the pedestrian performance. Should revenue and profit continue to plateau, the elevated share price — rated at 22x my earnings guess — may be at risk of a de-rating. Still, the lighting specialist remains a very respectable business, and continues to be led by directors that think long term. I continue to hold.

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22 September 2017
By Maynard Paton

Quick update on FW Thorpe (TFW).

Event: Preliminary results for the twelve months to 30 June 2017 published 21 September 2017

Summary: Yet again this lighting specialist has delivered a very satisfactory annual performance, with revenue and profit attaining fresh all-time highs and the dividend lifted for the fifteenth consecutive year. Although the group’s largest division appears to be performing very well, other subsidiaries did not enjoy the very best of second halves. Management comments about 2018 seemed quite cautious, too. The accounts remain in pristine condition, but I am mindful of the shares trading at a rich multiple. I continue to hold.

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17 March 2017
By Maynard Paton

Quick update on FW Thorpe (TFW).

Event: Interim results for the six months to 31 December 2016 published 16 March 2017

Summary: Once again this lighting specialist has issued a very satisfactory set of results. The highlight was the performance of the group’s main division, which following a few subdued years has suddenly enjoyed a step-change to its financial progress. TFW’s other divisions reported impressive numbers, too, while the balance sheet remains teeming with surplus cash and investments. Throw in a coded management ‘upgrade’ for the full year and it’s perhaps no surprise the shares presently trade on an extended rating. I continue to hold.

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23 September 2016
By Maynard Paton

Quick update on FW Thorpe (TFW).

Event: Preliminary results for the year to 30 June 2016 published 22 September 2016

Summary: A very satisfactory set of record figures from this lighting specialist, underpinned by last year’s Dutch acquisition that appears to have delivered 75% annualised profit growth. TFW’s other two divisions reported positive progress, too, while the balance sheet remains awash with surplus cash and investments. Although the near-term valuation appears rich, the group’s decent financials, illustrious dividend and veteran board remain very captivating. I continue to hold.

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