Haynes: Profits boom at this iconic brand

Once in danger of disappearing altogether, this famous name is doing better than expected. Here's how. 

The sight of shares in Haynes Publishing (LSE:HYNS) riding high today may well come as a surprise to those investors who had probably written off the car manual specialist as belonging to a bygone era.

While motorists of a certain age will recall a Haynes maintenance guide as being an essential purchase, today's complicated and more reliable cars mean that fewer of us are likely to be rolling up our sleeves to carry out repairs.

But that's not meant the end of the road for the Somerset-based business, which published its first manual in 1965. It's reinvented itself by reaching into other consumer segments and targeting professional mechanics through its HaynesPro workshop data.

It's also embraced online and now generates more of its revenues from digital operations than it does from print formats. Haynes achieved a total of £33.8 million in annual sales for the last financial year, but today's trading update suggests September's full-year profits will be 10% ahead of market expectations and 24% higher than last time's £2.9 million.

The upgrade lifted shares by as much as 15% to 226p and the highest level since last August. Shares are still some way off their heyday in the mid 2000s, but they are also a far cry from the troubles experienced by two other "iconic brands" in the form of Hornby (LSE:HRN) and Stanley Gibbons Group (LSE:SGI).

Source: TradingView Past performance is not a guide to future performance

Haynes is free of debt and its strong cash generation recently allowed it to pay an unchanged interim dividend of 3.5p a share, providing a yield of around 4%. It's also been able to invest £4.4 million in new global content, datasets and delivery platforms in the most recent half-year, up from £4.1 million a year earlier.

The group says it has a clear vision and business strategy to become "a leading global automotive data, content and solutions provider".

About two-thirds of revenues come from the UK and Europe, with the rest from operations in North America and Australia. Its range of titles now spans sport, leisure, military and lifestyle subjects, while Haynes also has licenses to publish manuals with the Royal Navy, the Royal Air Force, Star Wars, Star Trek and others.

But growth in the UK and Europe has been strongest in its professional operations, with HaynesPro's half-year revenues recently up 10% on an underlying basis.

Having grown through acquisition, HaynesPro is now a key player in the automotive aftermarket with its technical data solutions used by parts distributors and manufacturers, diagnostic equipment manufacturers and fleet operators among others.

On the consumer side of the UK business, automotive titles have been doing well with consumer digital products also doubling sales in the most recent half-year period.

It looks as if this strong performance has continued after today's brief trading update showed that group adjusted profits were likely to be 24% ahead of last year's.

Chairman Eddie Bell said:

"Our continued investment in people and new technologies, that enhances our specialist content and data sets, is a key driver behind this strong performance."