Richard Carr, TransTec chief executive, insists the company’s adverse exposure to the strong pound is `very limited’. The statement helped share values which had fallen to a 12-month low since the 1996 results posted in March.
Carr attributed the fall to the currency cloud hanging over the automotive and aerospace sector generally, and said proof of TransTec’s performance would be in improved earnings and dividends, which the share price would in time reflect. He dismissed the idea of a share buy-back to boost the price.
Overall, prospects for the year `remain positive’, he said. Brokers look for profits of around £21m (£14m).
City interest in TransTec centres on its search for a third leg to cut dependence on the automotive industry. Bill Jeffrey, finance director, said that `one or two’ businesses have been considered, but had not met the criteria. The company will spend up to £200m on the right target.
To finance a big deal, Jeffrey said he would be happy with gearing of up to 80%. The interest bill is currently covered 10 times, and Jeffrey would be comfortable if that were cut to only four times for a major purchase.
Carr reported on the development by the group’s advanced machines arm, of a `highly innovative’ laser-cutting system for the manufacture of CV joints for front-wheel drives. Benefits include improved manufacturing efficiency, high quality and design flexibility.
The system is operational at an overseas affiliate of GKN, and an agreement is due to be finalised soon for a customer-designed system for a world leader in CV joints manufacture.
Carr said that in the manufacturing division, automotive volumes were ahead year on year, and the order book showed `a solid level of organic growth for several years’.
Performance of the Northern Ireland foundry – where TransTec is making cylinder heads for the new Ford Explorer engine – is improving following its initial start-up.