A slowing of demand in the US meant that the overall revenues of AIM-quoted Somero Enterprises Inc (LON: SOM) were flat last year even though Europe and Australia performed well. Additional overheads meant that profit declined.
US-based Somero Enterprises Inc designs, assembles and supplies concrete levelling equipment. North America is the key market for the business and problems with concrete deliveries hampered sales.
Australia is benefiting from direct sales. A strong second half meant that European revenues reached a new peak. India is a country where revenues are building up, although China is a tougher market with declining income.
In 2022, revenues edged ahead to $133.6m, while pre-tax profit dipped from $46.5m to $42.3m. Higher overheads reduced the profit. Investment has been put in place to help Somero Enterprises to grow in the future. The new Houghton, Michigan facility will open this year.
The dividend based on profit remains twice covered by earnings. The standard dividend total is 27.78 cents a share, while the special dividend is 7.7 cents a share. Both types of dividends are lower than for 2021. The total has fallen from 50.72 cents a share to 35.48 cents a share. Even with another special dividend next year, the total dividend is expected to be 31 cents a share for 2023.
Net cash fell to $33.7m at the end of 2022 because of the high dividend payments during the year. It could be $31m by the end of 2023.
finnCap forecasts a further decline in pre-tax profit to $39.3m. That is likely to lead to a reduction in dividend to 31 cents a share.
At 377p, the prospective multiple is less than nine. The potential dividend yield is nearly 7%.
