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Fox Marble Holdings PLC: THE INVESTMENT CASE

Fox Marble no longer a fox on the run

Has Fox Marble finally turned the corner? Recent news flow has been positive and Mother Nature seems to have taken the company off her hit list.
Marble lobby
INVESTMENT OVERVIEW: FOX The Big Picture
You too can have a lobby like this if you order your marble from Fox Marble

Fox Marble Holdings PLC's (LON:FOX) chief executive Chris Gilbert would be among the first to say the company has a chequered past.

He's always been confident of the top notch quality of the marble in the quarries that the company operates in Kosovo and Macedonia, but has maybe underestimated the challenges the company would face in its early years.

Challenges such as terrible weather; a fire at one of its equipment supplier's factories; and the Brexit vote putting a brake on the top end of the London housing market.

Recent news flow has been positive, though, and the company's patient shareholders have been rewarded with a 50% hike in the share price this year.

 

A quick laundry list of milestone deals provides plenty of reasons to be cheerful.

READ Fox Marble bags first significant Turkish customer

READ Breakthrough deal in India for Fox Marble

READ Fox advances to Mayfair

The order from Turkey prompted the company to revise up its estimated order book for the current year from €4.1mln to €4.4mln, which should be recognised as revenue in the current year.

To put that into perspective, in 2016 the company's sales totalled €801,040.

Gilbert believes the orders demonstrate the reputation of the Fox Marble brand is growing, as it establishes a track record of effective production and distribution of high-class marble.

Meanwhile, the long-awaited factory in Kosovo will finally come on stream in July.

Fox Marble's factory is the first marble processing plant in the country and it means the company will no longer have to send slabs off to Italy – which seems to be the centre of the marble world – for processing.

The net result is an improvement in margins for Fox Marble, and it will also give the company lots of flexibility in terms of the supply chain.

“It also increases yield. We can now process smaller bits of marble that it was not economical to ship, so yields per tonne will rise – not that we’re short of marble,” Gilbert told Proactive Investors.

Fox Marble has four quarries in operation: Cervenillë, Syriganë and Malishevë in Kosovo and Prilep in Macedonia. 

Together these produce nine varieties of stone.

During 2015 and 2016 the focus was on opening new benches in all of the quarries in order to achieve more consistent and increasingly high quality output. 

More recently, the focus has been on converting its burgeoning order book into sales.

Its worth noting that Fox Marble was only formed in 2011. In many respects it has come a long way, but a combination of over-promising, acts of Mother Nature and the unpredictable climate has created a situation where it now really needs to start delivering.

In its results statement for 2016, the company said its order book is at a “healthy €4.4mln”, and it remains confident this will grow in the second half of 2017, particularly in the Indian and Turkish markets.

Revenue in 2016 rose to €801,040 from €229,242 the year before, but chairman Andrew Allner conceded this was “far below” management’s expectations, as some prospects in the pipeline took longer to convert into firm orders while volumes on some closed contracts were not as high as anticipated.

Average selling price per tonne rose to €574 from €357 the year before.

The loss narrowed to €2.76mln from €3.03mln in 2015.



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