Fenner sees demand weaken Down Under

The Hessle, East Yorkshire-based conveyor belt maker has been buffeted by weak coal prices over the past year, caused by emerging markets’ slowdown and the US shale gas boom.

In November, the group said order rates from the US coal sector bottomed out in May and have improved “steadily” since.

Yesterday, Fenner said North American demand for its conveyor belts in the September to November quarter was “as expected and above the lows of 2012”.

However, demand from Australia has waned following a strong first quarter. “Mining industry sentiment in that market has declined, primarily as a result of lower iron ore and coal prices,” said the group. “Other regions of the world showed steady demand patterns.”

Fenner said its advanced engineered products (AEP) division, which makes products including seals for the oil and gas industry, has seen “pockets of moderate de-stocking”. But it added there are “encouraging signs” that activity will be stronger in its second half, as customer de-stocking reduces.

David Buxton, analyst at brokerage FinnCap, said: “Demand in a couple of areas – such as Australian mining – appears somewhat weaker than our own expectations, which leads us to downgrade our forecasts.”

FinnCap cut its rating from buy to hold.

Fenner said it “remain(s) mindful of global economic uncertainty, which continues into 2013”.

It expects trading volumes for its first half to be lower than the record levels seen in 2012, and its results to be more weighted to the second half.

“We... remain well-placed to capitalise on the long-term growth opportunities in our core markets,” said the company.