Unipart considers shares buy-back

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UNIPART, the car parts group that was sold to its management and employees six years ago, is contemplating a further buy-back of shares from its 4,000-strong workforce.

This follows the announcement that the company defied the slump afflicting the rest of the motor industry last year with record profits of pounds 19.8m.

Ordinary shares, which sold for 5p at the time of Unipart's management and employee-led buyout from the Rover Group in 1987, are now valued at pounds 6.50.

The last time staff were allowed to cash in their shares was in 1989, when the company offered to buy back up to 25 per cent of each employee's holding.

Institutional shareholders were also allowed to sell back their holdings.

Management and employees now own 45 per cent of the company, with Rover holding a further 20 per cent and the balance in the hands of institutions.

An announcement on whether Unipart is going ahead with a buy-back will be made before May, when Unipart and its trustees have to decide whether to increase the dividend from last year's 22.7p or revalue the shares.

Last year's profit represented a 28.5 per cent improvement on the previous year and was achieved in the face of one of the worst slumps the motor industry has witnessed in 40 years, with UK car sales down by a third on their level in 1989.

John Neil, group chief executive, attributed the improvement to a productivity increase of more than 30 per cent and pounds 2m in direct cost savings achieved with the aid of employee suggestions.

Unipart, which specialises in supplying the automotive after- market, also opened a catalytic converter plant in Coventry and secured new business with Land- Rover, Toyota and Honda.

Mr Neil warned that Unipart's pounds 30m programme of investment in training and new facilities could affect results this year. 'Our objective is to build a world- class business and invest heavily in training and improving the skills of our people. If that hurts profits, so be it,' he said.