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Siebe's future looking rosy

Siebe's business mix, ranging from process controls to compressed air, is hardly one to set pulses racing, but it continues to produce one of the best performances in the engineering sector. It is also testimony to the acquisition skills of Barrie Stephens, the chairman, who has spent more than pounds 1.3bn in the past 12 years picking up businesses.

Yesterday's 21 per cent rise in interim profits to pounds 144m for the half- year to September means Siebe makes nearly as much in six months as it made in 12 in 1991. The profits were struck on turnover 19 per cent ahead at pounds 1.2bn and the half-way dividend rises 10 per cent to 4.44p.

The power house of the group continues to be Foxboro, the US group acquired for pounds 357m in 1990 which led the way in automated controls for industrial plants.

It has gained a useful one or two points of market share in the past 12 months, taking it close to 14 per cent, where it is challenging the industry leaders, Honeywell and Emerson.

That performance helped to spur a 26 per cent rise in operating profits to pounds 68m from Siebe's main control systems division.

With the launch of new Foxboro products and strong growth rates in capital goods markets across the developed world, the future looks set fair for the operation.

Generally a late-cycle business, process controls has been helped by the maturity of the worldwide economic recovery, but Siebe's strength is reflected in the performance of the more consumer-oriented temperature and appliance controls business.

In a market for white goods estimated to be down around 3 per cent this year, the division has done well to raise operating profits 8 per cent to pounds 63.6m. However, although customer stock levels should improve in the second half, lower housing starts in the US and a drop in automotive production could keep the lid on sales growth in the short term.

Aside from the small worries surrounding US consumer markets, the outlook is good for Siebe. Orders up 19 per cent stand at a record pounds 770m and bolt- on acquisitions have still to kick in fully. An extra pounds 10.2m in additional profits has already been squeezed out of the six picked up last year and the four acquired so far in 1995 should contribute pounds 8.9m in a full year, even before treatment.

Group profits of pounds 320m would put the shares at 768p, up 29p, on a forward p/e of 18, which is up with events.