Brammer to cut costs as profits soar

REPLACEMENT parts group Brammer said today it is loking to cut costs across the group as it revealed a bumper hike in profits.

The Manchester-based group, dubbed the ‘RAC of industry’ for its ability to deliver parts such as bearings and belts quickly across Europe, said given the deteriorating economic conditions it is slowing down its acquisition programme and cutting jobs.

Chairman David Dunn said: “Regrettably this will result in some redundancies and restructuring costs. The pay back will be short and effective and will serve to protect the business going forward.”

The company employs more than 2,400 people, including 100 at its headquarters in Wythenshawe.

In the year to December 31, pre-tax profits rose 26.8% to £18.9m, while turnover was up 26% to £478.4m. Brammer raised its dividend 6.9% to 7.7p.

Net debt at the group has risen from £59.4m to £84m which it said reflected a currency exchange effect of £22.6m.

Brammer said it has increased market share in the UK and Europe and spent £8.3m on six acquisitions which have boosted sales for £11.7m.

Mr Dunn said that while the group has delivered another year of significant progress, the final two months of the year became very challenging as the economic recession became a reality.

He said: “Given the rapidly deteriorating economic conditions the board tested various scenarios for Brammer as we entered 2009. The board concludes that the group is well spread across Europe, has no significant dependence on any individual customer, and serves a wide variety of business sectors.

“We are convinced that we have a sound, durable, and winning strategy which is working well, and a first class management team. Nonetheless, in the current circumstances the business will inevitably be impacted by reduced economic activity.

“Without question 2009 will be challenging. With a changing economic backdrop visibility is limited. We are taking and will continue to take appropriate action to protect the medium and long term future for the business and the board remains confident in the business model for Brammer and its prospects.”

Brammer did not disclose which part of the business would be affected by the redundancy programme.