Investment Column: First Technology races ahead

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The Independent Online
Since its near-fatal crash in 1991, when it looked like it was on its last legs, First Technology has been unstoppable. Rising demand for safety features in cars has provided a growing market for the group's electronic switches, which cut car fuel supplies and unlock doors in a crash. The same factors have also boosted demand for First Technology's family of crash-test dummies.

Yesterday's first-half results to October, which showed a 29 per cent rise in pre-tax profits to pounds 5.7m, suggest that growth is showing no signs of slowing. Even though it is supplying almost 14 million fuel cut-off switches a year - they are installed in one in three new cars produced around the world - chairman Fred Westlake reckons there is more to go for.

Meanwhile, First Technology can look to sensors which measure the level of fuel in the tank and switches that unlock a car's doors after a crash, to provide a further boost to earnings. European Union support for the new car assessment programme - the system of rating cars according to how they perform in a series of crashes - will ensure that demand for dummies remains healthy.

Of course, there are risks. At a forecast growth rate of just 2 per cent a year, the world car market is hardly booming. General Motors and Ford, two of First Technology's largest customers, are expected to lose market share. That said, customers continue to demand ever more sophisticated safety features, and it will take years before First Technology's products are fitted as standard on every car. Competition remains a worry, but the group's main products seems to have an unassailable lead.

On Peel Hunt's full-year profit forecast of pounds 11.5m the shares, which yesterday rose 24p to an all-time high of 343.5p, trade on a forward p/e ratio of 22. The premium rating is fully deserved.