Companies: AI.   

Aero Inventory, a company supplying aircraft parts and providing inventory management services to the aerospace industry, has announced solid set of results to the end of June.

The group establishes long-term, sole-supplier contracts with customers in the United Kingdom, Europe and Asia Pacific, to manage the purchase, delivery, inspection, documentation and storage of aircraft parts. The service is supported by online facilities to list inventories and manage them with a view to providing customers with improved efficiency, reductions in costs and, ‘as far as possible, a paperless solution’.

For the year, pre-tax profits lifted 46% on the previous year to £10.5m, on sales also up 46% to £63.5m. Diluted earnings per share fell 4% from 25.1p to 24p, following a placing and rights issue.

Shareholders were also heartened by the announcement of a 6.7p dividend, giving a total of 10p for the year, and the news that Aero had signed a ten-year contract with Qantas Airways, to act as ‘preferred supplier’ of aircraft parts to the Australian airline. The deal is the largest signed by Aero to date and is expected to be worth around $1.6bn over its initial ten-year tenure.

Aero intends to continue expanding operations in all key territories and anticipates strong growth in the year to come. Analysts at house broker JP Morgan agrees, forecasting pre-tax profits to more than double to £26.5m and turnover to follow suit, reaching around £141m next year.

For 2008, growth is expected to continue with £37.7m profit before tax on sales of £215m and earnings expectations for the two years ahead are set at 39.4p and 56p per share. At the current 362p, that puts the shares on healthy multiples of 9.2 and 6.5 times. Based on these forecasts, they look cheap. Buy.