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LONDON (Alliance News) - Avingtrans PLC Wednesday reported a higher pretax profit for the last financial year as revenue was buoyed by acquisitions it made in its aerospace, energy and medical divisions.
However, the company warned that it was still being hit by the strength of sterling, and it also said it needed to improve its performance in some of its operations.
The maker of components and modules for the aerospace, energy and medical sectors reported a pretax profit of GBP2.5 million for the year to May 31, up from GBP1.3 million a year earlier, as revenue grew to GBP60.3 million, from GBP45.3 million. The profit growth underperformed the revenue growth as it booked costs for restructuring its medical and energy unit and costs for starting up Metalcraft in China.
It increased its final dividend to 1.8 pence a share, from 1.5 pence a year earlier, bringing its total dividend to 2.7 pence, up from 2.2 pence, a move it said signalled its confidence in its future.
Revenue growth was driven by the acquisitions it made to bolster the aerospace unit in 2013, and by Maloney Metalcraft for the energy and medical division. Excluding Maloney, energy and medical unit revenue declined 7%, mainly due to ongoing problems with a new Siemens product roll-out.
It admitted that the Maloney Metalcraft acquisition had proved challenging, but said its reinforced management team was getting to grips with the recovery amid the company's broader restructuring of the energy and medical division.
There were more financial positives. It generated GBP1.6 million in cash from operating activities in the year, compared with a GBP0.5 million cash outflow in the previous year, while net debt only rose to GBP3.6 million, from GBP2.9 million at the end of May 2013, even though its invested GBP4.3 million in its capability and capacity, up from GBP2.8 million a year earlier.
"Nonetheless, our performance must still improve. For Aerospace, although Composites losses were reduced and Farnborough turned in a steady profit, both are capable of improvement. At Energy and Medical, bottom line losses in the year were partly justified by Maloney Metalcraft acquisition costs and subsequent restructuring. The new divisional leadership team have been busy clearing the decks, but a sizeable task remains, to integrate Metalcraft and Maloney, fully utilise our engineering capability and restore divisional profitability to respectable levels," Chairman Roger McDowell said in a statement.
The chairman said Metalcraft China made larger start-up losses than originally intended, due to the slower roll-out of the new Siemens product, which is an on-going issue. Avingtrans' Mertalcraft unit is making components for the product.
Avingtrans said adverse exchange rates had reduced group profits by GBP0.35 million, or about 10%, in the last financial year, and it is still being hurt in the current financial year. "Short term forecast variation means we need to remain agile," McDowell said.
The company signalled it was still interested in further acquisitions.
"Our recent acquisitions emphasise our intention to build shareholder value through targeted M&A activity. Although we cannot state that this will result in any further transactions during the current financial period, we will pursue any opportunity to enhance long-term value," it said.
Avingtrans shares were up 5.3% at 143.70 pence Wednesday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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