28.03.2025
Following yesterday's results announcement, this £20m-capitalised Chesterfield-based packaging specialist is in line to make £2.7m profits this year, with earnings of 12.5p and paying a 6.0p per share dividend.
At the current 120p, the shares of Robinson (LON:RBN) are undervalued and more than capable of rising to at least 150p within the next year.
Estimates suggest that next year the company could make £3.2m profits, with 14.6p per share earnings.
The Business
This group was set up way back in 1839 following John Bradbury Robinson buying up a bankrupt business and then beginning the manufacture of pillboxes.
Over the years, the company expanded at a steady rate and its range of products and materials used in manufacture diversified.
Today, Robinson employs over 400 people, is an AIM-listed manufacturer with two plants in the UK, two in Poland and one in Denmark.
It specialises in custom packaging with technical and value-added solutions for food and consumer product hygiene, safety, protection, and convenience.
The group’s main activity is in injection and blow-moulded plastic packaging and rigid paperboard luxury packaging, operating within the food and beverage, homecare, beauty and personal care, and luxury gift sectors.
The plastics division is primarily focused in the food sector with a blue-chip customer base and strong reputation for quality.
It concentrates on injection-moulded plastics packaging for customers operating in the food and drink and confectionery markets.
Its plastic packaging products include plastic bottles, pots, tubs and containers, caps, closures and over caps, jars and custom packaging.
The paperboard division manufactures rigid paperboard packaging solutions used for food and confectionery, toiletries and cosmetics and presentation packs.
It specialises in luxury gift rigid paperboard packaging, from rigid boxes and lids to folding cartons, clam packs, book jackets and trays.
Its premium boxes are used in sectors, such as confectionery, toiletries and cosmetics, and mobile phones.
This division has a more diverse customer base than plastics, whilst competition in this area is strong for long-run, high volume processes from vertically integrated competitors.
It provides products and services to major players in the fast-moving consumer goods market including: Unilever, P&G, SC Johnson, Reckitt Benckiser, McBride, Nestle, Avon, Premier Foods, Dr Oetker and Bakkavor.
2024 Final Results
The year to end-December 2024 reported a 14% improvement in revenues to £56.4m (£49.7m), while the group’s underlying operating pre-tax profit was 45% better at £3.2m (£2.2m), showing a gross margin of 20% (19%), adjusted earnings increased 28% to 9.6p (7.5p), with a 6.0p (5.5p) dividend per share.
Management Comment
Chairman Alan Raleigh stated that:
"I am pleased to report strong progress in 2024.
Our results build on the positive momentum experienced in the second half of 2023, with substantial sales growth of 14% to £56.4 million, gross margin increasing to 20% and a 45% increase in underlying operating profit to £3.2 million.
This confirms that our strategy of partnering with major FMCG brand owners, investing in new technology, driving efficiencies, and supplying sustainable packaging is delivering the anticipated results.
Our excellent customer relationships have created a very strong sales pipeline for 2025, and as our customers respond to new market opportunities, we see additional growth potential in future years.
As we grow revenue and underlying volumes, we will continue to drive improved efficiency and profitability across our operations.
The underlying performance of the business gives the Board confidence to recommend an increase in the final dividend to 3.5p per share.
This brings the total dividend declared for 2024 to 6.0p (2023: 5.5p).
Progress has also been made on the buy-out of the defined benefit pension scheme, but the closure of the scheme has resulted in a non-cash and non-Company cost of £3.7m included in our income statement (required by accounting standards despite no impact on shareholders' funds).
The disposal of surplus properties, with some sales expected to complete in 2025, will further improve our financial leverage and ability to support attractive growth projects.
Finally, despite strong progress in H2 2024, there is a non-cash impairment charge of £1.7m related to the Denmark operation due to start up issues earlier in the year
associated with processing post-consumer recycled resin, demand variability and a longer learning curve than anticipated on the large project implemented there.
Pleasingly, interventions during the second half of 2024 are already delivering improvements and are expected to return that operation to profitability in 2025.
In combination, these other items have resulted in a Group loss before tax of £3.8m (2023: loss before tax £0.7m).
Despite these non-recurring items, the combination of volume and revenue growth, efficiency and profitability gains, improved financial leverage and new leadership, gives the Board confidence that we are well placed to compete and win.
As such, we expect underlying operating profit for the 2025 financial year to be ahead of 2024, and ahead of current market expectations.
We remain committed to delivering above-market profitable growth and our target of 6-8% underlying operating margin."
The Equity
There are some 17,687,223 shares in issue, of which 933,778 (5.28%) are held in Treasury.
Larger holders include Charles Robinson, Director, with 1,372,527 shares (8.2%) and Peter Gyllenhammar AB holds 557,464 shares (3.33%).
Broker’s View
Analyst Edward Stacey, Director of Research at Cavendish Capital Markets, for the second time this year, has raised his Target Price for the group’s shares to 155p.
His estimates for the 2025 year to end-2025, suggest revenues of £59.5m (2024: £56.4m), with adjusted pre-tax profits rising to £2.7m from £2.4m, lifting earnings to 12.5p (9.6p) and maintain its dividend at 6.0p per share.
For the year to end-December 2026 he sees £62.5m sales, £3.2m profits, 14.6p of earnings and the same 6.0p per share dividend.
My View
I have followed Robinson for years, its investment appeal is basic – much-needed products into the FMCG marketplace, a good balance sheet, increasing sales and margins, paying out a twice-covered dividend from increasing earnings.
Additionally, the company reported that it is making continued progress towards the sale of surplus real estate, with further disposals expected during the current year.
The group’s shares, which were up to 173p just over four years ago, now at 120p have upside potential to at least 150p within the next year.
(Profile 02.04.2020 @ 55.50p set a Target Price of 80p*)
(Profile 31.01.2025 @ 117.50p set a Target Price of 140p)
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