600 Group looks to Far East following sale
BRITAIN'S biggest machine tool maker 600 Group has sold its Canadian distribution operation as it focuses on a strategy to development relationships with partners in China.
The Leeds-based company has sold 600 Group Equipment to Semcan as part of a restructuring of its business in Canada.
Semcan, which through its Forward Precision Tools division specialises in the supply and service of machine tools for Canadian manufacturers, has paid £1.5m for the division.
Proceeds from the sale, which includes an agreement for Forward Precision Tools to distribute 600 Group's tools in Quebec and Ontario, where a new sales office is to open, will be used to reduce the debt at 600 Group's North American operations.
600 Group said developing relationships with Chinese partners was a key part of its strategy and that agreement had been reached in principal with Chinese machine tool partner, The Dalian Machine Tool Group, to establish a 50-50 joint venture in Germany to market and distribute 'Dalian' branded products across Europe.
It said it was planning the next phase of growth for its Electrox laser marking business after strong UK sales and that its operation in South Africa was performing solidly.
600 Group welcomed the news last month that Precision Technologies Group had no intention of making a solid bid for the company but in an interim management statement today said it had incurred one-off costs of around £300,000 following the initial approach.
Chief executive Andrew Dick said the company continued to make positive progress in the implementation of its strategy, which evolved from a review undertaken in 2006.
Sales for the three months to December 29, the third quarter of its financial year, increased by 8% to £21m compared to the same period in 2006. Overall sales for the nine months ended December 29 increased by 9% to £62m.
After adjustment for the disposal of Erickson Machine Tools last April, underlying sales increased by 14%. 600 Group is not to proceed with the sale and leaseback of its Letchworth property given the present conditions in the commercial property market and its strong balance sheet.
Mr Dick said the group's trading outlook remianed in line with expectations.
He said: “Order intake across the group's major markets, including Europe, North America and South Africa, has remained good and the board anticipates that overall revenues in the second half of the current financial year will be somewhat higher than those recorded in the first half.”
Results for the year to March 29 are expected to be released in June.
