AEA Technologies is to expand its rail industry operations in Europe following a restructuring earlier this year which saw a cut in the number of divisions and a reduction in management jobs.
The company, which last week announced a 3% increase in annual profits to £30m, has turned its 10 original divisions into five new ones – rail, environment, engineering software, nuclear technology and future technologies.
The changes have made AEA more focused, chief executive Peter Watson said. `We’ve been able to take out a layer of management – the five groups now report directly to me. It also means that they are more autonomous, so we need less people at the centre.’
Watson said the company is investing heavily in the high-margin businesses in which it expects to see strong growth, such as rail. It already supplies software, technology and intelligent systems to Railtrack and the train operators, and has recently developed new products to measure track performance, improve signalling safety and increase train reliability.
The company is expected to make an announcement on its rail business next week.
Keith Watson, an analyst at Commerzbank, said the restructuring was likely to make AEA Technology more attractive to investors.
`Anything which helps refine the business portfolio will be helpful in clarifying the focus of the company,’ he said. The company’s increase in turnover was made through a growth in sales to the UK private sector and European exports, which rose to 73% of the company’s turnover.
However, sales to the UK government and public sector have declined from 56% to 27% since the company was floated in 1996, because of a reduction in sales to AEA’s former parent, the Atomic Energy Authority.
The increase in exports has ensured that Watson is not overly concerned about the strength of sterling. `We don’t see the currency as an issue,’ he said. `We take quite a lot of our revenue in Japanese yen, and the yen has strengthened quite dramatically against sterling in the past year so that has helped us,’ he said.
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