MACHINE tool maker The 600 Group has returned to profit and said business confidence is slowly returning to its major markets.
The Heckmondwike-based group said developed economies are showing a renewed interest in manufacturing and investment.
The group reported a £940,000 pre-tax profit in the six months to September 28, up from a £660,000 loss the previous year.
The firm, which is in takeover talks with Chinese suitor Qingdao D&D Investment Group, said it has increased its market share and made improvements in operational efficiency.
The new deadline for D&D to make an offer or walk away is December 4.
600’s revenue rose 5.2 per cent to £20.9m.
600’s chairman Paul Dupee said: “With globally recognised brands and continued focus on developing our product range, we continue to look forward with optimism.”
He said the return to profit had been achieved despite reduced industry demand for machine tools in the first half of the year.
“We expect business confidence overall to improve in the second half,” he added.
600 designs and develops metal cutting machine tools sold under the brand names Colchester, Harrison and Clausing.
It also designs and manufactures precision engineering components under the brand names Pratt Burnerd and Gamet.
The group said that revenue growth was driven by increased market share in Europe, where sales were up by more than 35 per cent on last year. This was despite overall market activity in eurozone countries being relatively weak compared with last year.
It added that demand in the UK improved steadily over the six months.
Market conditions in North America in the first quarter were slower, but gathered momentum over the summer.
Overall revenues for North America fell around seven per cent. 600 said this fall was not as steep as the overall market decline, implying a gain in market share.
Demand in Australia was very subdued as a result of government austerity measures coupled with low levels of mining investment in the run-up to the recent elections.
Australian sales fell by more than 20 per cent, although 600 said the impact on profits was mitigated by tight control of overhead costs.
Mr Dupee said the decision to downsize manufacturing operations into a reduced site footprint at Heckmondwike was completed in September. As a result of this the second half should benefit from improved operating efficiency and a reduction in overhead costs.
The group said it recently regained exclusive rights to the distribution of Colchester branded products in Germany, the largest market in Europe.
Mr Dupee said this will provide opportunities to increase market share in Germany over the next few months.
In the laser marking division, Electrox, revenues were maintained and a brand new range of laser marking equipment and workstations was launched at the EMO trade exhibition in September.
“The full range of new products was completed and launched on time and was well received by the market,” said Mr Dupee.
“Further new products and software upgrades are expected to come on stream during the second half of the financial year.”
The group said that recent industry forecasts indicate that outlook for the machine tool consumption worldwide is expected to show growth of 5.2 per cent in 2014, with the most significant contribution from the Americas at 7.3 per cent.
This compares with the 2013 decline of 8.2 per cent worldwide and the 3.8 per cent fall in the Americas.
Mr Dupee said the group is optimistic about the future as its brands are globally recognised and it is continuing to develop its product range.
Net assets increased to £21.9m following the adverse effect of £600,000 of exchange rate movements.
Waiting game over bid talks
600 announced it had received an approach from D&D in September. Yesterday it said the talks may or may not lead to a cash offer being made for the company.
It added there is no certainty that an offer will be made or what terms it will be on and said a further update will be made as and when appropriate.
600 Group makes a wide range of products from high-tech lathes for car manufacturers and giant chucks for the oil and gas sector.
It was founded as scrap metal merchant George Cohen, Sons & Co in 1834.
600 has 100,000 lathes in operation worldwide and has distribution in 50 countries.
Its other brands include Clausing and Pratt Burnerd.