Tricorn focuses on China to maintain growth as H1 shows improvement

X The Business Desk

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WEST Bromwich-based Tricorn Group is to press ahead with its growth strategy in China as it looks to counteract softening markets in Europe.

In its interim results for the six months ending September 30, the AIM-listed tube manipulation specialist said its performance demonstrated how the group was developing.

Group operating profit margins improved to 7.6% (2011: 6.3%), while pre-tax profit was up 18% to £0.855m (2011: £0.722m).  The improved profitability helped the group to increase its net cash position to £1.130m (2011: £0.072m).

In line with its dividend policy the board has declared an interim dividend of 0.1p per share to shareholders on the register on February 8, 2013.  The dividend will be paid on February 22, 2013. Adjusted earnings per share stood at 2.07p, up 25% (2011: 1.66p).

The firm said its expansion in China was progressing to plan and that capital investment made in 2011 was now helping deliver further improvements.

Despite the softening markets the company said it was developing pipeline of new opportunities.

Nick Paul, Tricorn chairman, said: “We have delivered a strong set of half year results demonstrating continued improvements in operating margins, strong cash generation has led to a considerably strengthened balance sheet and we have made encouraging progress in establishing our manufacturing facility in China. This, alongside the pipeline of opportunities for new business positions us well for further growth.
“In the shorter term, the softening global markets seen through the second quarter look set to continue into the second half.”

The group operates three main business segments focused on the Energy & Utilities, Transportation and Aerospace sectors.  

Revenue for the period was £11.552m, down £0.868m from a year ago, as a result of softening markets being experienced by some of the divisions through the second quarter.

“However, all three divisions delivered increases to underlying operating profit margins as they remained focused on continuous improvement and started to realise some of the benefits from the ongoing programme of investment in facilities,” said the interim report.

Earlier this year the group announced its intention to establish a manufacturing facility in China as a key part of its strategic development in South-East Asia. The facility is a wholly-owned foreign enterprise and has now been granted its business licence. Installation of plant and equipment has progressed to plan and the group said it expected to begin first shipments later this month.

Further manufacturing cells will be established through the balance of the current financial year with revenue planned to increase through the following year.