Investment and softening demand set to impact H1 profits warns Tricorn Group
A LEGACY of investment in new operations and softer demand in the UK are likely to see first half profits fall below expectations – despite a 15% rise in revenues over the period, West Bromwich-based engineering group Tricorn has warned.
The group, which specialises in the manipulation of pipe and tubing assemblies to niche markets in the energy & utilities, transportation and aerospace sectors, said revenue from the former Whitley Products operation in North Carolina, which it acquired in March, together with modest but increasing revenues from its Chinese facility had more than offset softer markets for the UK businesses and, an anticipated lower revenue from the aerospace sector.
It said good progress had been made in establishing a stable platform in the US from which to grow. In addition, it said the Whitley operation had already attracted new business with an annualised value of around $4m.
However, it added that as expected, there had been some reduction in existing business as customers followed through, at least in part, on commitments made to alternative suppliers at the time the business was in receivership. More encouragingly, it said some of this business was starting to return as customers saw the investment being made in the North Carolina facility.
Revenues in China continued to grow as both the number of products being supplied expanded and the customer base broadened. Investment in resources is slightly ahead of plan in response to customer requirements to localise capability and to accelerate ISO 9001 approval. The Chinese joint venture announced in July became operational towards the end of the first half and the first sales into China from this facility have been made.
In the UK, revenues have remained relatively soft in both the energy and transportation divisions and at similar levels to the second half of the last financial year. It said while there were some indications of improving markets, this was later than anticipated and was now likely to be towards the end of the current financial year.
The period also saw the group complete a restructuring of its aerospace operations in line with lower demand. New business is starting to be secured and the group said it anticipated manning levels would increase through the second half as a result.
“Given prevailing conditions for the UK businesses and our investment in both the USA and China, PBT (pre-tax profit) for the half year is expected to be slightly below management’s expectations for the period,” it said.
Tricorn will release its half year results for the six months ending September 30, 2013 on December 3.
Tricorn employs around 430 employees, has six manufacturing facilities in China, USA and UK. It operates through five brands: MTC; Redman Fittings; Maxpower, RMDG Aerospace and Franklin Tubular Products.
