Bromsgrove sells foundries for pounds 17m

BROMSGROVE Industries took the most important step to date in its divestment programme yesterday with the sale of its aluminium foundry activities for a total of pounds 17.3m.

The company, which has 25 subsidiaries with a total value of pounds 65m, is trying to refocus itself into a specialist engineer.

The foundry business was bought by a consortium of investors led by the Midland businessman David Auty and backed by the venture capital group 3i. The business employs 700 people.

In the year to 31 March 1993 the foundry business made operating profits of pounds 1.3m on turnover of pounds 30.2m. It had assets of pounds 7.5m.

After the disposal earlier this year of the James Naylor plastics division for pounds 5.4m Bromsgrove reduced gearing from 69.8 to 57 per cent. On 5 April the environmental division was sold for pounds 3.1m.

Bromsgrove's automotive companies are also being sold under a strategy which should leave the group with a dozen companies in about three divisions. Analysts estimate the automotive operation could fetch up to pounds 15m.

Bijan Sedghi, chairman, said the intention was to move away from low-margin businesses to high-margin and niche operations with international growth potential. These include medical forgings, in which it has 70 per cent of the British market, and equipment for the offshore oil industry.

Bromsgrove has faced volatile trading and margin pressures, reflected in the dip in half-year profits to pounds 3.14m ( pounds 4m). The company was formed as an automotive component supplier to Rover Group but diversified radically in the acquisitive 1980s. The shares rose 2.5p to 112.5p.