View from City Road: Siebe stays in control
Wednesday 09 December 1992
At that time its shares stood at 150p and it had few City friends after the previous summer's dollars 656m debt-financed purchase of Foxboro, the automation controls group based in Massachusetts.
Foxboro, after a dollars 100m cost-reduction programme, is now more or less fully integrated into Siebe, contributing pounds 5.6m to interim pre-tax profits after all financing costs and the use of pounds 5.9m of provisions.
A company that was losing money three years ago is now turning in an operating margin of 17.3 per cent, despite lower sales as orders from key gas, oil and petrochemicals markets were delayed. The outlook for 1993 is 'bullish', says Siebe.
Cost reduction has been far from confined to Foxboro. Although sales, at constant exchange rates, fell by 3 per cent, group operating margins rose from 13.4 per cent to 14.2 per cent thanks to determined cost-cutting in most areas.
In otherwise tough markets specialised engineering scored a 70 per cent jump in profits to pounds 8.5m on the back of new German automotive product launches.
Some 1,200 jobs went in the first half, making a near 20 per cent reduction in the workforce to 31,000 since September 1990, and Siebe has disposed of 2 million square feet of redundant factory space.
Cash generation also shows few signs of flagging. Just over pounds 34m surplus cash came out in the first half, reducing gearing from an end-year 78.8 per cent to 68.7 per cent, which leaves Siebe on course for next year's target for gearing in the mid-fifties.
Hefty gas generation, a 45 per cent US sales base and a possible pounds 15m currency kicker in 1993/4 make a multiple of 15, taking CNWM's forecast of pounds 173.5m this year, look cheap. But the downturn in Germany and Japan has yet to hit Siebe and the company's admission that it is 'looking around' for opportunistic acquisitions may hinder, but not rule out, further outperformance.
In pictures: Saturn images from Cassini probe as it prepares to turn lens towards Earth
Serena Williams apologises after comment that rape victim 'shouldn't have put herself in that position'
FBI finds possible human remains at former home of late gangster James Burke - the man who inspired Goodfellas
'Theres something quite unpleasant going on': Nigel Farage confronted for second time on visit to Scotland
World news in pictures
- 1 Bankers could face jail after report urges the Government to introduce new criminal offence for reckless management
- 2 Breaking the Silence: In the reality of occupation, there are no Palestinian civilians – only potential terrorists
- 3 Richard Nieuwenhuizen death: Six teenagers and 50-year-old father convicted of manslaughter in shocking case of referee killed over a game of football
- 4 Exclusive: Newcastle's star talent-spotter on brink as Joe Kinnear sparks walkout
- 5 Vast methane 'plumes' seen in Arctic ocean as sea ice retreats
iJobs Money & Business
£500 - £600 per day: Orgtel: FX Options Front Office Java / C# Developer - Ba...
£600 - £700 per day: Orgtel: Project Manager - Front Office - Regulatory IT C...
£600 - £750 per day: Orgtel: FATCA Project Manager - Banking - London - £600-...
£550 - £600 per day: Orgtel: Fidessa Analyst / PM - Banking - London - Up to £...