The long-term future of FKI’s automotive division is in doubt, despite it winning a global supply contract last week from Ford for gearshift cables on the new Escort. The parts are to be built at a new plant in Birmingham.
Worth £12m a year, the Escort contract follows a similar deal last year to supply gearshift cables for the new Ford Mondeo, worth £17m annually.
Production is due to come on line at the new Birmingham factory in time for the Escort’s launch next year. Up to £4.5m will be spent on building the plant and 20 jobs will be created.
However, the deal has not deterred the FKI management from planning to dispose of the division if a suitably priced acquisition does not appear in the long-term.
`If the business is to have a long-term future, we must double the size of it,’ said Bob Beeston, FKI chief executive.
FKI disclosed the Escort order with its financial results which saw turnover increase by 15% to more than £1bn and pre-tax profit rise 24% to £112.1m.
Beeston put the good results down to product start-ups in the automotive division and acquisitions in the engineering group.
The acquisitions from BTR of Hawker Siddeley Electrical Power Group and the purchase of Marelli Motori, nearly doubled the engineering division’s turnover.
Hawker Siddeley Electrical Power Group made a healthy contribution to cashflow when a joint revaluation showed that BTR had charged £20m too much for the company – more than 10% of its £182m book value.
Shrinking demand from the British coal industry and weak markets in France and Germany provided FKI’s blackspot, causing turnover in the materials handling division to fall by 10% to £247.m.
The division still generated a profit of £36m.