BBA may release brakes

BBA Group, the brake pads-to-nappies engineering group, may be ready to abandon its more traditional engineering interests after a strong performance in non-woven materials and aircraft services. Analysts predict that the company may sell off its friction materials division, which makes brake pads, in order to invest more heavily in its other, more profitable businesses. […]

BBA Group, the brake pads-to-nappies engineering group, may be ready to abandon its more traditional engineering interests after a strong performance in non-woven materials and aircraft services.

Analysts predict that the company may sell off its friction materials division, which makes brake pads, in order to invest more heavily in its other, more profitable businesses.

BBA made several major acquisitions in the US in 1998, including aviation companies UNC Airwork and AMR Combs, and non-woven material producer Veratec. It also sold off specialist electrical engineer Ajax Magnathermic.

Earlier this week BBA’s non-wovens division was reported to be investing £31m in a factory in China making materials for tampons and sanitary towels.

Analyst Sanjay Jha of Wiliams de Broe said BBA is no longer an engineer in the traditional sense: ‘The question is now whether the rest of the company’s activities fit in with its non-wovens business. The key question is where the growth is going to come from.’

Pre-tax profits for 1998 rose by 5%, to £164m, while operating profit on continuing business was up 21% to £168.9m.

Sales increased slightly from £1.19bn to £1.21bn, with growth in the company’s continuing operations going up 13%.

The company’s dividend rose 10%, broadly in line with city forecasts. The company trades at a premium to the rest of the sector, partly because the strategy of chief executive Roberto Quarta has impressed analysts.