Tomkins this week tried to ‘draw a line under the past’ as the beleaguered engineering group said it would stay in one piece.
Chairman David Newlands confirmed Tomkins has no immediate plans to break up its automotive or construction businesses as widely predicted late last year.
He said a strategic review in October concluded that selling or demerging major chunks of the group would not be in the short-term interest of shareholders, although he would keep options open. Instead, Tomkins will press on with its strategy of focusing on three business areas — industrial and automotive, air systems components, and engineered and construction products.
The group this week unveiled interim pre-tax profits of £89m against £210m in 1999. Sales fell to £2.45bn from £2.66bn. Newlands warned that the rest of Tomkins’ financial year is also likely to prove tough going. ‘There is little doubt that the second half is going to prove challenging, as there will be further deterioration in a number of the markets in which we operate,’ he said.
The Tomkins boss identified engineered and construction products, along with the north American automotive original equipment markets as especially likely to pose difficulties. But he claimed the review would allow Tomkins to ‘draw a line under the past and look to the future’.
Among the review panel’s recommendations were to pull out of the Smith & Wesson handguns business, dispose of a number of other non-core operations and appoint a new chief executive ‘with a clear commitment to achieving the growth of shareholder value’. The latter reflects Tomkins’ urgent need to restore stability at the top following the departure of Greg Hutchings.
It was shareholders’ concern at the performance of Tomkins’ stock that led them to challenge Hutchings with allegations of corporate excess, including his use of company jets and flats. Newlands said the review had made ‘achieving the highest standards of corporate governance’ a priority.