McKechnie plans pounds 200m spending

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The Independent Online
THE ENGINEERING group, McKechnie, could spend up to pounds 200m on further acquisitions as its reshaping continues. The company said yesterday that more deals could be announced in the next few months in its core specialist engineering and plastics divisions, with several acquisitions under negotiation.

In plastics, McKechnie makes crates for supermarkets, bodies for Dyson vacuum cleaners and the "widgets" in Guinness cans. In specialist engineering the group focuses on fasteners for aerospace and cars and plastic inserts for mobile phones. Margins are higher and the products have scope for international expansion.

Following the pounds 63.5m sale of the Australian consumer products businesses, the remaining consumer business looks non-core. A sale seems certain, although chief executive Andrew Walker says the time is not yet right to sell this good cash generator.

McKechnie delivered solid half-year results, with profits flat at pounds 28.6m. Profits from continuing operations rose 23 per cent. Margins are rising, and hit 14 per cent in the US, now yielding 36 per cent of profits.

The group's strategy is starting to lift the share price. On full-year forecasts of pounds 59.5m the shares - down 3.5p to 436.5p yesterday - trade on a forward multiple of 10. With a healthy 5 per cent dividend yield, they look good value.