Smaller Companies: Mayflower picks up a stiff breeze

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MAYFLOWER Corporation, the little-known specialist engineer, is in pole position to clinch several big car industry orders that are likely to transform the company.

The first concerns Aston Martin's new DB7 sports car, unveiled at the Geneva Motor Show last week. Mayflower is close to signing a five-year contract to build over 600 car bodies annually.

Although the car will not go into production until spring 1994, Mayflower's specialist engineering subsidiary, Motor Panels, has been involved with the project since last year.

Mayflower also won a contract to manufacture driver compartments for Marshall, the UK specialist vehicles group. Industry experts estimate that the two deals are together worth about pounds 25m and compare with Mayflower's total turnover of just pounds 27m in 1991.

However, these could be dwarfed by an order from Ford in the US. Negotiations for this contract, involving the long-term supply of parts for a new truck, are understood to be at an advanced stage.

The new contracts underline Mayflower's potential to exploit fundamental changes in the UK and US automotive industries.

At one end, the sector is dominated by high-volume vehicle manufacturers. However, new technology has led manufacturers to segment their markets into low- volume niches, such as sports cars and off-road vehicles, where specialist engineers like Mayflower are becoming vital.

These companies are increasingly involved in long-term 'partnering' relationships to supply customers with sub-assemblies and large sections of vehicles.

The company is a prominent maker of 'driver cabs'and bodies for several US and UK truck and van makers, including Mack and Leyland DAF. Customers from the car industry include Land- Rover, with Mayflower making body panels for the Discovery.

Although Leyland DAF's financial problems could hit Mayflower, its exposure to the troubled Anglo-Dutch company is limited, accounting for about 15 per cent of group profits.

Helped by acquisitions, the company is expected to report an almost threefold jump in taxable profits to pounds 3m for the year to last December and pounds 5m in 1993.

The company was debt-free last year but, given the expected growth, may need to call on shareholders to fund its expansion. At 47p, the shares are trading at 12 times forecast 1993 earnings. Good value.