Hydraulics group enjoys improved first half performance
Flowtech Fluidpower, the Skelmersdale-based hydraulics group, reported increased interim turnover and profits today.
The firm saw an 18.7% increase in revenues of £55.3m for the six months to June 30, compared with £46.6m the previous year. However, the business said they were seven per cent down on the more representative 2019 period, before the coronavirus pandemic.
A pre-tax profit of £2.3m compared with a pre-tax loss of £900,000 in 2020.
Net debt stood at £13.2m, down from £14.5m the year before.
Working capital increased by £4.7m which was in line with the group’s planning and expectations and linked to increased activity levels, as well as the investment in inventory to combat global supply chain challenges.
Overheads were broadly flat, with savings achieved from restructuring activities funding new growth initiatives, such as the digital agenda.
Revealing the current trading picture, Flowtech said it has been pleasing to see that in the first half of 2021 certain of its key customers exhibited demand levels above original estimates, meaning in many cases, volumes have returned to pre-COVID-19 levels and enabled Flowtech to deliver a solid performance.
A challenge as the group entered 2021 was to predict the changes in volume due to the lockdown which was then affecting the UK, and its other trading territories of Republic of Ireland and the Netherlands.
The post-Brexit trading structure between the UK and both Northern and Republic of Ireland has also been an issue, as approximately 17% of revenue is undertaken by Nelson Hi-Power and Hi-Power Transport, with a further four per cent from the group’s English-based operations to Ireland.
Flowtech said it has been focusing its efforts on managing within this new framework, and in the first half of the year it has been able to maintain gross margins.
The group is dependent on its own supply chains to service increased demand, and in the second quarter, and now into quarte three, there have been difficulties in obtaining core product for short-term needs.
In addition, lead times from all major supply partners are being extended, often coupled with price increases. But the group said it is confident it can retain its gross margin position with pass through price increases into the market.
It added that, having successfully managed its inventory position down over recent years, its need to support increased demand and ensure overall stock availability and service levels are maintained, has meant that its investment in stock is increasing. It expects this to continue into the second half before this position rebalances.
Chief executive, Bryce Brooks, said: “We are pleased that current trading continues to support our ‘return to growth’ agenda and we have made meaningful progress with each of our strategic goals. Volumes are recovering, margins are stable, and we are proactively addressing the short term headwinds associated with problematic global supply chains.”
