The Investment Column: Umeco's roll continues
Profits have been on a roll since Umeco recorded a loss of pounds 144,000 in 1993 and the latest half-year figures give few reasons for concern. The pre-tax total soared by two-thirds to pounds 1.03m in the half-year to September, with the original businesses recording gains of 22-44 per cent and Tortube, the cooker parts business, now turned round and trading profitably.
The group's fortunes started to take off in the second half of last year. An order moratorium lasting several years imposed by the Ministry of Defence was broken towards the end of the year, to the benefit of the fluid transfer operation, which makes ground refuelling vehicles for aircraft. Elsewhere, Pattonair, which distributes fasteners and seals to the aerospace industry, is cashing in on the switch to third party distribution by the big players in the industry, as is B&K, a sealants, glues and speciality chemicals operation.
The rate of profits growth chalked up in the first half is unlikely to be repeated until big orders won this year start to kick in in 1997. Business won by Pattonair from BMW-Rolls Royce, GKN Westland Helicopters and British Aerospace is now said to be worth approaching pounds 5m a year, while fluid transfer has picked up further "substantial" orders from the MoD.
With no sign of a let-up in the trend towards outsourcing and growing consumer demand for boilers and cookers, the future looks set fair. Full- year profits of pounds 2.5m, rising to pounds 3.25m in 1998, would put the shares on a distant forward rating of 15. Fair value, with the remaining 7 per cent holding of Osman Abdullah, formerly of Evered, providing a potential overhang.
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