Vp Plc (VP.)
Vp’s FY’24 results confirm a solid performance and an impressively resilient outturn on all key financial metrics. Revenue and adjusted profits are a shade below the prior year, whilst return on average capital employed, the final dividend and year-end net debt all show a year-on-year improvement. The results are in line with our expectations and are, once again, sector-leading.
We nudge our Fair Value estimate up from 1090p to 1110p. We see attractions in a 5.6% dividend yield and significant scope for earnings growth over the medium term as management initiatives take effect and, ultimately, market recovery takes hold.
Resilient performance despite market challenges
Vp again benefited from the diversity of its services and end markets. The UK division reported a very modest decline in operating profit overall (-c.2%), whilst International recorded very impressive growth of c.50%. The Group has made a solid start to the new financial year, with trading said to be in line with expectations.
Strategic progress under new leadership team
The results highlight the steps that have already been taken in terms of progression of Group strategy under the new management team. In particular, there is a renewed focus on cross-divisional collaboration and operational excellence, as well as a clearer articulation of the digital roadmap. Other developments include new HR leadership and a continued focus on ESG, particularly in terms of investment in low-emission fleet, as well as an important reorganisation at Brandon Hire Station.
Valuation remains attractive despite recent bounce
Vp’s shares have performed well in recent months (+c.30%) alongside improving sentiment towards UK-focused shares. Despite this, the shares remain attractively valued and trade at a discount to the immediate peer group. In our view, Vp’s consistent outperformance of sector peers and long-term track record of earnings and dividend growth warrant a premium rating.