TransTech warns motor slump will hit profits

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The Independent Online
A PROFITS warning from Transfer Technology sent the shares tumbling by 17p to 83p after the engineering group said its automotive division had been hit by poor demand.

Shares in TransTech, chaired by Geoffrey Robinson, the Labour MP, have recently been hit by negative comments from City analysts, even though they have forecast that annual profits this year could jump to about pounds 14m. The company saw a 62 per cent first-half rise to pounds 5.6m, on turnover a third higher at pounds 65m.

Yesterday Mr Robinson said: 'Although severe short-term reductions in automotive industry demand are expected to mean that TransTech's results for the current year to 31 December 1993 will be below market expectations, the group's earnings for the year are expected to show continuing progress, as indicated at the time of our interim results.'

TransTech has been trying to reduce its dependency on the struggling European motor industry. However, the company also announced that it had made an important breakthrough with a contract to supply cylinder heads to Ford. Mr Robinson said the deal would provide 'significant revenues' from 1996.

'While current trading in our automotive division has suffered from further deferrals, reduced off- take and consequential redundancies in common with the rest of the European motor industry, this order confirms that the medium term outlook remains sound,' he said.

Stock market confidence in the shares has not been helped by the company changing its auditor, stockbroker and public relations adviser in the past year.