Shares up 20% as engineering group returns to profit

Worcestershire engineering group, Tricorn has announced full year results significantly ahead of expectations – helping to turn losses from the prior year into a major surplus.

The Malvern-based group, which manufactures pipe and tubing assemblies to the Energy and Transport sectors, said the performance owed much to the consolidation of its new Chinese manufacturing operation and contract wins from the United States.

Investors reacted positively, with shares up 20% in early trading to reach a three-year high.

In the full year to March 31, 2017, group revenue increased 2.8% to £18.5m (2016: £18.02m), with pre-tax profits rising to £230,000, compared to a loss of £273,000 for the prior year. Earnings per share saw a loss of 0.19p in 2016 converted into a profit of 0.72p.

Despite the performance, the board has not recommended paying a dividend.

The group enjoyed a particularly strong second half, with revenue up 8% compared with the first six months and 21.5% higher than the corresponding period last year.  From July 2016, the group’s businesses in China benefited from being consolidated into an enlarged joint venture, while a favourable US dollar translation more than offset the resulting reduction in reported revenue.

In the UK, revenue continued to grow as a result of new business and the product application base was expanded to include braking systems for electric vehicles.

Commenting, Andrew Moss, chairman of Tricorn, said: “In a period in which market conditions have at times been challenging, we are pleased to report a significant improvement in our performance, with profits significantly ahead of market expectations.

“During the year we successfully completed the consolidation of our manufacturing operations in China, which is now trading profitably.

“The investment we have made in aligning our manufacturing footprint to the needs of our customers combined with our ongoing focus on operational performance is enabling us to win new business, grow market share and improve profitability.”

He said the group had been encouraged by the improved trading in the final quarter of the year and now expected to make further progress in the current year.

The group has secured more than £10m of new business, either through long-term agreements or the results of new contracts in the US.