Investment: Pressac rings in the profits

MANUFACTURING SUCCESS stories are few and far between, but Pressac, the Midlands-based manufacturer of electronic equipment for cars and fascias for mobile telephones, yesterday announced a 22 per cent rise in turnover, a 44 per cent rise in operating profit and a 39 per cent rise in profit before tax to pounds 14m in the year to the end of July.

At the same time it released details of new orders that will increase turnover by 20 per cent over the next two years.

The company owes much of its success to the fact that 70 per cent of production and 80 per cent of sales are made abroad, in the US, France, Germany, Italy, North Africa and Latin America, which largely balances out the effects of a strong pound.

It has also committed itself to the pursuit of efficiency and standards essential to win long-term contracts from global customers, and it spends heavily each year on new product development.

Three-quarters of current sales go into the automotive industry, where Pressac makes circuits, relays and modules for instruments and engines.

Sales are inevitably geared to the fortunes of the industry. But the electronic component content of cars is rising by about 10 per cent a year and the value of Pressac products in the average car has grown from pounds 1.50 to pounds 10 in the past 10 years.

One-fifth of current turnover goes to the mobile phone market, where contracts are less secure but sales are set to double in the next three years, and within five years could account for 40 per cent of turnover.

Analysts left their forecasts for the current year unchanged at pounds 23m and earnings of 16.3p, but next year's forecasts are moving up to pounds 26m and earnings of 19p a share.

The shares rose 5p to 219p yesterday, but they touched 308p this summer and now look attractive at 12 times times forecast earnings.