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(Sharecast News) - Andrews Sykes reported a record level of operating profit for the year ended 31 December on Wednesday, despite a decline in revenue driven by unseasonably cool summer weather across its core European markets.
The AIM-traded pumping, heating and cooling supplier said operating profit rose 2% year-on-year to £23.2m, supported by tight cost control and commercial efficiencies, even as revenue declined 3.6% to £75.9m.
It said its performance was underpinned by strong relationships with key accounts, which helped offset reduced demand for air conditioning hire, particularly in the UK where summer temperatures were the lowest since 2015.
While turnover fell, notably in the second half, margin resilience was aided by strategic lease exits and disciplined cost management.
Profit after tax fell to £16.8m from £17.8m in 2023, with the decline attributed to lower finance income and higher tax charges following the introduction of corporation tax in the United Arab Emirates, and the full-year effect of the UK's corporation tax increase.
UK operations remained the largest contributor to group results, with revenue down 2.9% to £43.1m but operating profit increasing to £15.4m.
The European segment saw revenue fall to £23.6m, including a £1.5m impact from the exit of the French market, while operating profit slipped to £8.2m.
In contrast, the Middle East business recorded a strong turnaround, with revenue rising to £7.7m and operating profit nearly tripling to £1.1m, supported by new management and growing hire demand.
Cash generation remained robust, with net cash inflow from operating activities of £20.3m and year-end net funds rising to £7.2m.
The group said it invested £5.5m in its hire fleet and a further £1.1m in property and equipment.
A new subsidiary in Saudi Arabia, launched early this year, was expected to provide further growth opportunities amid the region's construction boom.
The board proposed a final dividend of 14p per share, in line with last year, bringing the total 2024 dividends paid to 25.9p.
The group also retained an authority to repurchase up to 12.5% of its share capital, with the board affirming its support for maintaining that flexibility.
Trading so far in 2025 was in line with expectations, the board said.
At 1040 BST, shares in Andrews Sykes Group were up 5.88% at 540p.
Reporting by Josh White for Sharecast.com.
