Outlook: Tomkins

GREG HUTCHINGS, chairman of Tomkins, was in resigned mood yesterday as he prepared for his company's exit from the FTSE 100 share index. According to analysts, Tomkins will make pre-tax profits this year of around pounds 500m. None of the four newcomers joining the index make anything like that amount, and one of them, Energis, makes no money at all. Mr Hutchings knows as well as anyone that the stock market values companies by reference to their perceived future prospects, not their past, but even so, this must seem a trifle perverse.

For many years, Mr Hutchings, a Lord Hanson protege, did terribly well for his shareholders. Following in the maestro's footsteps, he built a many-faceted conglomerate out of businesses in mature, cash-generative industries. Even after conglomerates turned unfashionable, he stuck to his guns, insisting that, fundamentally, all businesses were the same - the only thing that separates one from another, in his view, is good and bad management.

The turning point for his share price was the acquisition of Ranks Hovis McDougall. The age of the conglomerate was not quite over, but even then hardly anyone, apart from Mr Hutchings, believed it made any sense to combine food manufacturing with automotive and construction components, Smith & Wesson guns, bicycles and lawnmowers. As it happens, the "buns to guns" combine, as Tomkins rudely became known in the press, has been as good as its word, and in a difficult market, it has managed to increase margins and profits at Ranks quite markedly.

Not that this has done Mr Hutchings any good. It is not just conglomerates that are unfashionable; Tomkins is also in some deeply unfashionable businesses too, cash-generative though they might be. Mr Hutchings has struggled to find a way forward, but the big acquisition he needed to fuel earnings and growth has failed to come his way.

Now he's being forced to fall back on a course of action he always vowed to resist - share buy-ins. Even for him, it's a no-brainer with the share price as low as this; few acquisitions could ever promise to be as earnings- enhancing.

Since the last figures, Tomkins has bought back more than 5 per cent of its shares; a tender offer for a further 15 per cent is now planned. However, the offer has been pitched at such a miserable level that unless the share price continues to shrink, few shareholders are going to want to avail themselves of it.

Mr Hutchings has had a good innings. It may be unfair and unjust to say it, but Tomkins is a company that looks to have had its time. A more radical break-up than the one proposed is called for. Everything else has been tried; separating the company for disposal or merger into its three core constituent parts looks to be about the only option left that might be worth pursuing.

Start your day with The Independent, sign up for daily news emails
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower