The Investment column: Trinity untroubled by strong pound

Trinity Holdings, the specialist maker and exporter of buses, fire engines, dust carts and the like, says it has yet to be hit by the strength of sterling, despite 43 per cent of its sales going abroad. Exports soared 38 per cent in the year, helping total turnover to rise 26 per cent to pounds 262m.

The rather slower growth in profit, up just 9 per cent to pounds 17.4m, was blamed more on temporary difficulties within export markets themselves. Those affected bus body kit maker Duple Metsec and UMW-Dennis, the joint venture company in Malaysia. After allowing for the new shares issued to fund the acquisition of Douglas & Schopf in January last year, earnings per share were static at 20.6p.

But cash flow remains strong - the company had pounds 8.2m in the bank at the end of the year - and the current order book is also at record levels. Trinity is market leader in the UK bus, fire engine and refuse-collection markets and after combining Douglas & Schopf with Reliance Mercury, has now added leadership in airport and dock-handling equipment.

Although capacity at Dennis Specialist Vehicles was increased by 30 per cent in 1995, demand for buses and coaches was so strong that a further increase in assembly facilities is needed this year. DSV has 41 per cent of the bus market and 15 per cent of the coach market in the UK.

Growth in the domestic coach market levelled off last year, but pounds 70m worth of orders from Hong Kong provides a sizeable cushion. Cuts in fire service budgets reduced demand 30 per cent below normal levels last year, although there are signs of a recovery in 1997.

The shares fell 3.5p to 315p, putting them on a forward p/e of 14, if profit forecasts of pounds 19.5m for this year are borne out. The continuing strength of sterling is the main obvious threat, but assuming it eases the shares still look good value.