Profile: CK Chow - Rising star of the east
GKN's leader takes no credit. Success is down to 30,000 hard-working heroes. By Richard Halstead
Sunday 10 August 1997
The last 24 hours have been stressful, as Chow has been deeply occupied parading the company's results around the City, and persuading sceptical journalists and analysts that the deeply unfashionable "focused industrial group" (politically correct-speak for conglomerate) operating primarily in defence and automotive engineering can be a better home for investors' money than, say, financial services.
But C K, a naturally ebullient character according to colleagues, is not smiling idly. The mission has been an outstanding success. The company reported profits of pounds 203m in the first half of the year, a 12 per cent rise which would have been over 20 per cent but for the pounds 18m lost in the translation of foreign earnings back into a strong sterling.
GKN's share price, already on the up from April when market makers started concluding that the company's growth was not being affected by the strength of sterling, has climbed 17 per cent since the start of the month and put on 70p in two days to finish the week at 1226p. "The quality of our growth has been good, with all the core businesses growing, and I think the City appreciates that," says Chow.
The 46-year-old Hong Kong-born former BOC executive, whose hiring last year by GKN chairman Sir David Lees was seen as quite a departure for the group which had traditionally promoted from within, has been finding his way into the job, and putting his own - albeit understated - mark on the business.
He has piloted the group through one major acquisition - the pounds 352m purchase of Sinter Metals in April, suppliers of powdered metal parts to the car industry - and disabused the world over the possibilities of another, larger deal, the oft-rumoured takeover of Vickers.
"We are not interested," he says. "The only thing we would do is look at a possible joint venture with Vickers in armoured vehicles to improve our position in the bid for MRAV [an armoured car replacement for the British, French, and German armies currently out to tender]." Any further speculation, he adds, is fruitless.
Chow says he can bring an international perspective to GKN's businesses, which means to him boosting organic growth, particularly in the Far East. His Hong Kong background will come in useful, as he is fluent in both Cantonese and Mandarin. "If anything, my culture is that of a world businessman. If I am thinking of poetry, the arts, or philosophy, I think in Chinese. If it is price earnings ratios, profits, and shareholder value, I do my thinking in English," he says.
After the initial surprise of his appointment, the City has warmed to him. "He has been growing in stature since he got there," says Daniel Bevan, an engineering analyst at Credit Lyonnais Laing. "He is that safe pair of hands the company needs right now. Investors don't want someone to shake the business up - it doesn't need it right now - what they want is someone to continue the organic growth and the globalisation of its products. They don't need a buccaneer."
Analysts have pointed to Chow's extensive knowledge of the Asian market as the prime reason Sir David plucked him from BOC, where he was running their gases division after 20 years of steadily working through the hierarchy in Asia-Pacific, with spells in Japan, Indonesia and Australia. This is a region that is particularly important to GKN's automotive business, which is one of the world's leading suppliers of constant velocity joints, an ingenious piece of ball-bearing and gear engineering that is used in the driveshafts of almost all production cars.
Asia is also the big potential growth market for GKN's fast-growing Cheps pallet business, an extraordinary company that has taken the pallet and industrial transportation market - hardly ones to set the pulse racing - by storm with innovative plastic crates, and saw its sales and profits growth well into double digits, contributing to the industrial services division's 13 per cent profit rise to pounds 42m.
Chow comes across as the very model of a modern major businessman. Educated at grammar school in Hong Kong, he took two engineering degrees in the US, the first at the University of Wisconsin and the second at the University of California, topping off with an MBA at the Chinese University in Hong Kong and Harvard Business School's Advanced Management Programme.
He is anxious not to claim any undue credit for GKN's fortunes. On one level this makes sense. After all, he has only been in the executive suite for 12 months, the first six as CEO designate rather than the real thing. But his anxiety goes further.
"I believe in the modern corporate world no one individual can claim credit for the health of a company. Most of our profit increase over the past few months has come from productivity gains from the workforce. We have 30,000 heroes at GKN, not one."
This also means, in CK's eyes, that public scrutiny of himself is not appropriate. He will not talk about his family, or his upbringing. His company-supplied bio is blank on the subject. A recent profile was revealing: born in Kowloon, the son of a teacher who fought for the Nationalists under Chiang Kai Shek and emigrated to Hong Kong rather than live under communism. Chow's upbringing was in a cramped flat shared with two other families, before the opportunity of grammar school presented itself and he seized it with both hands.
"He has travelled a long way from his roots," says one colleague of his reticence. "I think he prefers to live in the present, and concentrate on the future."
The future looks better than at any other time during this decade. Analysts point to the relative strength of the company's balance sheet - net cash of pounds 273m, despite its purchase of Sinter in April and provisions of pounds 270m against the possibility it might have to compensate franchisees in its Meineke Discount Muffler car parts retail business in the US for overcharging them for the cost of advertising. The initial judgment in favour of the franchisees awarded them pounds 334m, with the possibility of punitive damages being awarded on top. The company is contesting the decision through the US appeals process, and believes even if it loses, the damages will be reduced.
The question now for CK - he prefers the initials to his full name, Chung Kong - is how to make the future a reality. "We have a strong defence order book, and our products work - this may seem an obvious statement, but not every defence firm can say that - and our automotive, pallets and powder metals divisions are all growth platforms. If you ask me where we will be in 20 years' time, I must tell you I don't know. But it will be an exciting time."
Copyright: IOS & Bloomberg
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