Hepworth seeks buy to take on European market

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The Independent Online

Hepworth, the boilers to building products company, yesterday said it was on the look out for a large-scale acquisition to establish it as the leader in the European heating market.

Hepworth, the boilers to building products company, yesterday said it was on the look out for a large-scale acquisition to establish it as the leader in the European heating market.

Jean-François Chêne, Hepworth's chief executive who joined the underperforming business two years ago to restore it to profitability, said he was seeking a "significant" acquisition, in the order of "several hundred million pounds" after a programme of heavy cost cutting which resulted in more than 900 job losses.

He said: "Now we have got a bit of credibility, we are ready for the next stage." Mr Chêne added that if a suitable opportunity did not arise in the coming year, Hepworth would return to shareholders some of the £84m made from disposals, which includes £50m from the sale of its PC Henderson garage doors arm. Last year, the company's bid to buy Naylor Drainage was thwarted after the deal was referred to the Office of Fair Trading.

Unveiling 1999 pre-tax profits of £76.2m, up £11.7m on the previous year, Mr Chêne described the group's performance as "reasonably satisfactory". Over the past two years, operating profit has increased by 26 per cent while turnover has remained static at £600m.

Steve Charnock, an analyst at CCF Charterhouse, said: "They're doing all the right things ... But they are too small a player on the international stage." He said the company was operating in a challenging market. As well as increased pricing pressures from building merchants, intense competition and the impact of currency depreciation, Hepworth has seen a decline in demand for heating products due to warm weather.

In 1999, the group achieved £7m of cost savings by streamlining its purchasing process. It cut a further £5m by standardising its heating components.

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