Future set fair at David Brown for

INVESTMENT COLUMN

David Brown, once better known for its tractors and Aston Martin sports cars, is today rapidly re-establishing the engineering business on which it was founded in the last century. The formerly family-owned company owes its renaissance to the 1990 buyout that brought in two former FKI executives to lead the management of the group.

The record since then has been impeccable, with profits rising from pounds 3.85m in 1991 to pounds 12.5m last year, and half-way results to July show no sign of any let-up - the pre-tax figure is up 15 per cent to pounds 6.57m.

Despite the rights issue at 205p that accompanied May's move to mop up the remaining David Brown family-owned engineering companies, underlying earnings per share have moved up 12 per cent to 7.4p. The company is holding to its forecast that the four companies will be earnings enhancing in a full year. A reorganisation should see margins, now around 7 per cent, lifted closer to the group average of over 10.

More of a disappointment in the half year was the heavy pumps business, which saw profits dive 35 per cent on sales down 39 per cent. Management blames the timing of sales and technical specification changes by its Far Eastern customers, but with record order books and recent strong trading it is cautiously optimistic of making up the lost ground in the second half.

Another historic under-performer, the Radicon industrial gearbox manufacturer, is responding well to the introduction of new ranges and a pounds 3m investment programme will double capacity over the next 12 months.

Future group sales are almost completely underwritten by order books now standing at an all-time high of pounds 132m. Added protection is derived from Brown's lessening dependence on the domestic market, which has been cut from 70 per cent five years ago to just 16 per cent now - just as well, as the latest industry survey points to a further slowdown in growth.

Profits of pounds 15m before an expected pounds 1m reorganisation provision this year would put the shares, unchanged at 220p, on a prospective multiple of just under 14. About right.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Guru Careers: Pricing Analyst

£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Sales Team Leader - Wakefield, West Yorkshire

£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...

Day In a Page

Revealed: Why Mohammed Emwazi chose the 'safe option' of fighting for Isis, rather than following his friends to al-Shabaab in Somalia

Why Mohammed Emwazi chose Isis

His friends were betrayed and killed by al-Shabaab
'The solution can never be to impassively watch on while desperate people drown'
An open letter to David Cameron: Building fortress Europe has had deadly results

Open letter to David Cameron

Building the walls of fortress Europe has had deadly results
Tory candidates' tweets not as 'spontaneous' as they seem - you don't say!

You don't say!

Tory candidates' election tweets not as 'spontaneous' as they appear
Mubi: Netflix for people who want to stop just watching trash

So what is Mubi?

Netflix for people who want to stop just watching trash all the time
The impossible job: how to follow Kevin Spacey?

The hardest job in theatre?

How to follow Kevin Spacey
Armenian genocide: To continue to deny the truth of this mass human cruelty is close to a criminal lie

Armenian genocide and the 'good Turks'

To continue to deny the truth of this mass human cruelty is close to a criminal lie
Lou Reed: The truth about the singer's upbringing beyond the biographers' and memoirists' myths

'Lou needed care, but what he got was ECT'

The truth about the singer's upbringing beyond
Migrant boat disaster: This human tragedy has been brewing for four years and EU states can't say they were not warned

This human tragedy has been brewing for years

EU states can't say they were not warned
Women's sportswear: From tackling a marathon to a jog in the park, the right kit can help

Women's sportswear

From tackling a marathon to a jog in the park, the right kit can help
Hillary Clinton's outfits will be as important as her policies in her presidential bid

Clinton's clothes

Like it or not, her outfits will be as important as her policies
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders