Investment Column: FKI
Friday 28 May 1999
NOWADAYS MOST of the world's largest companies make their money from intangible assets like patents, brands or websites. , on the other hand, makes engine turbines and window frames. No wonder the engineering group feels obliged to identify a role in the e-commerce chain where it can add value and secure future earnings growth.
plans to use its Crisplant business, a Danish sorting systems company acquired earlier this week, to carve out a niche as an intermediary between Internet vendors and distributors like FedEx. Crisplant already has an DKr260m (pounds 23m) order from a "well-known" US on-line trader. Chief executive Bob Beeston suggests e-commerce could deliver around pounds 20m of revenues initially.
The problem for , as for its engineering peers, is that it is stuck in mature markets which deliver organic growth of around only 3 per cent. Fund managers perceive it as a stock that has come to a halt. Hence its meagre p/e of 8.5.
's hunt for new opportunities is not restricted to e-commerce, however. It aims to leverage its materials handling skills by using the distribution network acquired with Bridon in 1997. The Japanese office equipment market, worth pounds 8bn annually, is another target.
Yesterday's results saw the materials handling and hardware divisions lift sales by pounds 120m, though acquisitions accounted for pounds 100m of this. Operating profits in the engineering division grew by 22 per cent despite falling sales on the back of better business mix.
Despite its efforts to discover new markets, is dogged by negative sentiment. There are some clouds on the horizon too - the UK-based engineering division is vulnerable to sterling strength and the group has warned that rising US interest rates could hit its US window business. Analysts expect pre-tax profits of pounds 168m this year and earnings of 21p per share. At 184.5p, the shares are unlikely to soar in the near-term.
- 1 Rules on 5p plastic bags likely to lead to arguments at the check-out
- 2 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
- 3 Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
- 4 News agency criticised for describing Amal Clooney as 'actor's wife' in coverage of human rights trial
- 5 David De Gea to Real Madrid: Real finally get their man with £29m bid for Manchester United goalkeeper
Rules on 5p plastic bags likely to lead to arguments at the check-out
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Turkey duped the US, and Isis reaps rewards
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...