Mobile phones help Pressac growth
Article Date: Nov 02 2000Electronic and decorative equipment maker boosted profits by 14 per cent for the year to July, thanks to higher growth and margins in making products for the mobile and fixed telephony markets, writes Ben Cobley.
Pressac increased turnover last year to £192 million, 4.4 per cent up (and 9 per cent up when adjusted for currency-based losses) and pushed pre-tax profits up 14 per cent to £25.2 million before exceptional charges. However, it is growth in mobile telephony markets that is Pressac's at the moment. A second set of interim results, released becuase the company is changing its year-end from July to December, shows turnover for its mobile telephony products up 144 per cent to £16.1 million for the 12 months to 31 July compared to the same period last year. That figure represented just 8 per cent of total turnover for the period, 78 per cent of which came from sales to the automotive industry (sales to which are expected to grow by about 8 per cent per annum over the next few years).
Chief executive Geoff White says that mobile telephony is 'the future for the company', adding that he expected its contribution as a proportion of turnover to rise above the 50 per cent mark in the not-too-distant future. Sales to this sector only began in 1999. Operating margins for the comapny's telecoms and industrial division rose 4 per cent to 21.3 per cent, compared to a 1 per cent rise to 13.3 per cent for its automotive products.
Customers for Pressac's products already include Ericsson, Nokia, Motorola and Siemens with the company currently providing the covers for about 10 per cent of Europe's mobile phones.
The company already has an 'order bank'(provisional order book) for its mobile telephony products, which currently include key caps and front and back foil covers, worth £55 million for the year 2001. Many new offerings are now available to customers, including a cover into which the phone aerial is moulded and ICs providing radio frequency interference (RFI) screening to stop nearby electronic products being affected by use of the mobile. The company also has the ability to produce a personalised mobile phone cover for £20, available because it prints digitally downloaded designs on to its covers before moulding them into the phone's casing. All the competitors the management knew of painted on designs, making such a possibility a costly dream.
Meanwhile, Pressac expects fixed telephony operations to rise by at least 20 per cent per annum over the next three years as ADSL telecommunications services come into play across the world, enabling 8 million bits of data to be communicated over the same copper wires, compared to a current figure of about 100,000 bits. Pressac's new 'Category 6' connectors for the new high-speed data services are due to be launched in December or January and manufactured in North Africa. Pressac is already declared as BT's main supplier of these connectors. growth in automotive markets is expected to be in the region of 8 per cent a year.
Pressac's management has been advised by its lawyers that it has a strong case for 'a substantial claim' against the vendors of plastic mouldings manufacturer W.H.Smith, for breach of warranty and misrepresentation during negotiations for the purchase of the company, which Pressac bought for £24 million cash in August. The acquisition was expected to make a profit of about £1.7 million on revenues of £19 million for its year-end in 2001, though White commented that 'this won't happen', instead anticipating that Smith would probably just about break even.
Audited results for the 17 month period to 31 December, to be released in March 2001 will be negligibly affected, with 'only a few hundred thousand' knocked off previous revenue estimates. White did however comment that he was happy with the technology and management facilities acquired through the deal, which should establish Pressac as a genuine market leader for inmoulded decorative covers and key pads in the mobile telephony sector.
The shares fell 11.5p to 208.5p on the news.
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