MACHINE tools maker The 600 Group cheered investors with the news that annual profits leapt by nearly 50 per cent and it is to broaden its export markets to South East Asia.
The Heckmondwike-based group, which sells laser marking machines used to track military and medical equipment, is to focus on expansion into Thailand, the Philippines and Malaysia following strong demand from these countries.
600 sells just 15 per cent of its tools to the UK now.
The US is by far its biggest market, accounting for 60 per cent of sales following acquisitions, notably the recent purchase of TYKMA, a leading laser marking business, which has been fully integrated into 600’s US operations.
600’s finance director Neil Carrick said: “The US market is growing at a faster rate than the UK. All US military and medical equipment has to be laser marked for traceability.
“We provide the tools that laser mark the products. It’s not just the expensive equipment - it’s also the nuts and bolts.”
The group is looking at further acquisitions in areas that it already operates in and the US will be a key target market.
However the a key focus of growth over the coming year will be organic expansion.
“We’re performing well in a flat market,” said Mr Carrick after the results.
“The TYKMA acquisition has created a step change in laser marking.”
Analyst Ian Berry at WH Ireland said: “The outlook for machine tools is improving in the major markets of the UK and US although Europe remains weak.
“The group is expanding international distribution to leverage its brand names and looking to further increase scale with complementary earnings enhancing bolt on acquisitions.
“TYKMA is performing well ahead of initial expectations, which combined with synergies and reduced costs arising from the integration, should facilitate strong profit growth in 2016.
“The shares trade on an undemanding rating of six times 2016 forecast earnings.”
They closed on Wednesday up x per cent at xp.
Analyst David Buxton at FinnCap added:”The full-year adjusted pre-tax profit was broadly in line with our expectations.
“The outlook points to improving markets, increasing market share and achieving cost and operational benefits from the acquisition of TYKMA.
“Greater emphasis is now being placed on driving sales growth.”
600’s pre-tax profits rose 49 per cent to £3.7m on the back of a five per cent increase in revenue to £43.8m in the year to March 28.
The group said it made substantial changes over the year to improve operations and it has made acquisitions to give it a much stronger presence in its core markets.
Chairman Paul Dupee said: “This has been a year of substantial change. We have made two significant investments in TYKMA and the holding in ProPhotonix.
“TYKMA is now fully integrated with our Electrox business under the leadership of David Grimes in the US and is already making a good contribution to revenues and profits.”
He added that the group has established a strong position in its markets and improved revenues and profits.
He said this was achieved despite challenging worldwide market conditions and in particular a weaker than expected performance from the group’s Australian subsidiary.
The group said it would not pay a dividend as the board believes it should keep earnings to bolster the business.