Fenner buy strengthens group’s presence in the US

0
Have your say

ENGINEER Fenner has bought a US conveyor company, giving it access to the mining markets of Pennsylvania and West Virginia.

Hessle-based Fenner declined to say how much it has paid for Allison Custom Fabrication, but it said the US company has assets of £4m.

Allison specialises in the design, engineering, machining and metal fabrication of customised material handling equipment.

Fenner said it has a strong reputation amongst its customers in the underground coal industry for responsive and technically advanced engineering solutions for conveying systems and structure.

Fenner’s chief executive Nick Hobson said: “This is a significant development for the Fenner Dunlop Engineered Conveyor Solutions offering in the Americas.

“We have again expanded our capabilities and have broadened our offer to manage the life cycle of our customers’ conveyors. This acquisition further consolidates Fenner Dunlop’s position as the leading supplier of conveyor products and services to the North American markets.”

Analyst Ben Bourne, at Liberum Capital, said: “The acquisition of Allison, which makes drive systems for conveyors, is fundamental in driving up the margin of the conveyer solutions business.

“While Fenner Dunlop is dominant in Australia, this will strengthen the strategy of being the supplier of choice in the Americas.”

Fenner provides a range of products and services for conveying systems in the mining and power generation markets.

The group reported record trading in the year to December 31 and said its future is bright due to strong demand for coal from emerging economies and an ageing Western population.

The polymer engineering group, which makes products ranging from conveyor belts to components used in plastic surgery, said it has not seen demand slow, but it remains cautious over the global economy.

Fenner said annual pre-tax profits surged 87 per cent to £69.6m.

Fenner said three acquisitions over the past year have broadened its reach. It plans more deals, funded through cash generation.

“If we did not read the newspapers or watch the TV, our view would be ‘Crisis? What crisis?’” said Mr Hobson.

“We’ve seen no evidence of economic slowdown.

“However, we are circumspect. We’ve got our eyeballs on swivels.”

Fenner’s two divisions – conveyor belting and advanced engineered products (AEP) – were boosted by strong demand and a £150m investment programme.

Its conveyor belting arm, which serves the mining industries, lifted operating profits 54 per cent to £55.6m. Turnover surged as volumes of coal mined continues to grow, supporting global demand for electricity, particularly in growing economies such as China.

Mr Hobson said despite pressure to switch to cleaner power, coal will continue to play a key role in electricity generation.

Fenner has shifted its belting division away from pure manufacture to also target the ‘after market’ – servicing belts. The group’s AEP division, which was hit hard during the recession by companies clearing out old stock, grew operating profits 79 per cent to £34.8m.

Fenner has high hopes for its medical subsidiaries, which make textiles and components for surgical fields including cardiology, gynaecology, orthopaedics and urology.

“Western populations continue to age and gain weight; these are both predictors of future medical device consumption for the next several years,” it said.

ros.snowdon@ypn.co.uk