Now new look pays off at Eurotherm

THE INVESTMENT COLUMN
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The Independent Online
Eurotherm, the Sussex-based maker of meters and recording devices for industry, has followed a text book path back onto the growth track after losing its way in the early 1990s. Led by Claes Hultman, the Swedish chief executive now also chairing the board at Wembley, the group has dumped businesses generating around pounds 25m of annual sales over the last three years as it got out of peripheral and unprofitable areas.

Those moves held back turnover growth while the group was knocked into shape, but sales have now started to take off. The 6 per cent expansion last year has accelerated to 11 per cent in the first half of this, raising turnover to pounds 91m in the six months to April. But such is Eurotherm's operational gearing, that the increase in sales had the effect of catapulting half- year profits 31 per cent ahead to pounds 15.8m.

With earnings per share lifted 32 per cent to 11.7p, Mr Hultman has more than delivered on his promise to deliver organic growth, and he sees plenty more to come.

He says that approximately half the sales increase in the six months was organically driven, as process industries around the world replace recession-worn plant, a trend which should be boosted as companies seek to drive output higher.

But new products should also drive sales this year. Eurotherm is investing pounds 10m on development of a new temperature control device which it hopes to bring to market later in 1995.

Business in North America, already the company's biggest market, will get a shot in the arm from the March acquisition of Systems Automation and Services on a multiple of just four. SAS made pounds 1.5m last year, adding pounds 200,000 for the month it was included in Eurotherm's figures.

Full year figures from Eurotherm should see profits rise from pounds 26.1m to around pounds 34m, putting the shares up 12p to 447p yesterday on a forward multiple of around 18. Hold.

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