Smaller Companies: Pound's predicament helps exports

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The Independent Online
THE pound's weakness, notably against the dollar, is helping many smaller companies to compete in export markets.

Two examples are Protean, the water purification and laboratory equipment maker, and EIT Group, the communications systems provider.

About 60 per cent of Protean's sales are derived overseas, often in countries whose currencies are linked to the dollar. As a result, the weaker pound has made its products cheaper than those of overseas competitors, many American-based. Order books have been strong throughout the year, but currency factors are providing an added fillip.

Geoff Spink, managing director, says the water purification and laboratory hardware side is enjoying record orders.

The improving prospects are attracting interest from County NatWest, which is expected to recommend the shares in a circular due this week. Helped by the pounds 5m acquisition of Carbolite, the laboratory furnaces maker, in February, Protean is likely to lift taxable profits 180 per cent to pounds 1.3m for the half-year to 30 September with pre-tax profits of pounds 3.75m expected for the full year, rating the shares, at 116p, on 10 times earnings.

EIT is also enjoying a sharp boost in demand. The company, formerly Maxiprint, became the subject of a management buy-in two years ago and has since been transformed from a USM-quoted shell into an integrated telecommunications and networking systems supplier.

Mike Burden, chief executive, says EIT's software products have become highly competitive in overseas markets since last month's currency upheavals. Like Protean, most of its rivals are American, and a dearer dollar has made their products significantly more expensive.

In January, EIT became the first USM-quoted company to take over a fully-listed concern - Sintrom, the computer systems distributor, in a pounds 1.7m agreed deal.

Last month the move was followed with another purchase, the sixth since the new management team took over, financed with a pounds 1.9m rights issue at 17p a share.

The market is looking for taxable profits of pounds 1.6m this year, rating the - at 17p - on an earnings multiple of nine times.