Is the Haynes manual dying?

PUBLISHED: Feb 05 2016 @ 09:51 | Comments (0) |

From yesterday’s Newsletter we can conclude that Haynes (LSE:HYNS) is firing on one cylinder at least – it has an excellent business supplying mechanics with 1,000,000 pieces of information per day across Europe, where it is a market leader (HaynesPro).

But we need at least one more cylinder firing well to justify holding on to the shares at this price. Or, at least we need a good probability of future annual profits of £1m – £2m from the UK printed manual business and/or the North American/Australian printed manual business.

What are the odds?

First start with some facts

In the table I’ve traced the history of sales, operating profit and assets of the UK & Europe business on the one hand, and the North America and Australian business on the other.

	2011	2012	2013	2014	2015	H1 2016 annualised
HaynesPro + consumer digital Sales (mostly Europe, some UK)	£4.3m (decline 2%)	£4.7m (growth 9%)	£5.2m (growth 10%)	£6.1m (growth 18%)	£6.4m (growth 5%)	£6.8m (growth 6%, but 27% half-year to half-year)
UK + Europe print Sales	£9.0m (decline 17%)	£8.6m (decline 4%)	£7.8m (decline 10%)	£6.5m (decline 17%)	£5.0m (decline 22%)	£5.0m
UK + Europe (HaynesPro + print) Operating profit	£2.4m (growth 9%)	£1.8m (decline 27%)	£0.9m (decline 50%)	£0.9m (growth 7%)	£0.6m (decline of 34%)	£0.6m
UK + Europe (HaynesPro + print) Net assets employed	£13.3m	£13.5m	£13.8m	£11.2m	£10.5m	£9.3m
UK + Europe Operating profit/Net Assets	18%	13%	6%	8%	6%	6%

USA printed Sales	£15.8m (growth 7%)	£12.9m (decline 18%)	£11.2m (decline 13%)	£12.7m (growth 14%)	£12.0m (decline 6%)	£10.2m
Australasia + RoW printed Sales	£3.6m (growth 2%)	£3.6m (growth 1%)	£3.6m (decline 1%)	£4.1m (growth 14%)	£2.7m (decline 33%)	£2.3m
North America + Australia Operating profit	£4.4m (growth 10%)	£2.6m (decline 41%)	£1.7m (decline 33%)	£2.6m (growth 50%)	£1.2m (decline 53%)	£0.1m
North America + Australia printed Net assets employed	£21.9m	£22.4m	£21.6m	£20.9m	£16.1m	£15.7m
North America + Australia printed Operating profit/Net Assets	20%	12%	8%	12%	8%	1%
Group profit after tax (before exceptionals deduction)	£5.0m	£3.2m	£2.5m	£2.8m	£1.6m	£0.4m

This side of the Atlantic

UK and Europe print sales have declined by over 40% over 5 years. Profits from UK and Europe, even after throwing-in the digital profits, have fallen by three-quarters.

That’s the bad news. The good news is that …………….To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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