600 Group gets bigger share of the US market

The Heckmondwike-based group said the firm’s high levels of service mean it has grown its US market share at a time when the sector has been in decline.

Chief executive Nigel Rogers said: “Our service aim is to be the easiest manufacturer to do business with. We set out to provide a very high level of service.”

The group reported total profits of £3.9m in the year to March 30, up from a loss of £14.9m the previous year.

Revenues rose 11.2 per cent to £41.8m and the group reduced debts from £8m to £5.4m.

600 reported higher growth in the second half despite tough trading conditions. Second half operating profits rose to £1.04m, up from a loss of £70,000 in the first half.

The group said higher growth in the second half followed an increase in market share in the US, where the company sells drills, saws and grinding machines brought in from its supply base in Taiwan.

“Machine tool market statistics were quite subdued in the second half, but our own sales were growing,” said Mr Rogers.

The group said that market conditions became tougher in the second half with US machine tool consumption falling by 12 per cent in the second half after a five per cent rise in the first half.

However, 600 has seen a pick-up in the US market since April.

“Unemployment is coming down and we’re seeing renewed confidence in manufacturing. It’s not yet reflected in machine tool statistics, but we think it will be in the second quarter and the second half,” said Mr Rogers.

In the UK, order intake peaked in January 2013.

“The UK has been fairly tough, but over the last few weeks we have seen more signs of activity. Decisions are being made and we’re seeing a return to orders,” said Mr Rogers.

“Hopefully, it will be sustained. We’re optimistic for the UK market. People are more willing to invest in manufacturing.”

Taiwan machine tool exports rose by six per cent in the 2012 calendar year, but were down 25 per cent in the first three months of 2013.

Talking about trading over the first quarter of the new financial year, which started on April 1, 600 said that revenues are marginally ahead of the previous year.

While the group is seeing early signs of recovery in North America and the UK, the eurozone and Australia are expected to be weak throughout the first half.

Over the year the group, which counts BMW, McLaren, BAE Systems and Rio Tinto among its global blue chip customers, was able to invest in design and development following the completion of its disposals programme during the second half.

Coupled with the proceeds of the share issue in September 2012, the group has also used the funds to refurbish its Heckmondwike site.

During this period the company has redesigned and improved a number of its tools including the Tornado turning centre which is assembled in Heckmond- wike.

Mr Rogers said the benefits of the investments are clear and are contributing to customer confidence.

The group has showcased its new products and better facilities at various distributor events over the past few weeks.

Chairman Paul Dupee said: “Group focus has now moved from the turnaround phase of the first half of the year, towards growth from a stable, profitable and cash generative base.

“Although external market conditions became more challenging towards the end of the year, revenues continued to show a double digit increase through gains in market share, and operating margins improved across each segment of the business.

“We are continuing to invest in facilities and product development to sustain this improvement, and the board is cautiously optimistic of further progress in the current financial year.”

Under the leadership of Mr Rogers, the former Stadium Group chief executive, 600 has been restructuring and streamlining.

It sold its Heckmondwike freehold site to a privately-owned company, raising £1.1m to repay bank debt and provide extra working capital.

Its machine tools and precision engineering businesses stayed at the same site in a newly-refurbished leasehold factory and office complex.

Mr Rogers’ other moves have included selling the group’s South African waste handling machinery business, cutting jobs at its Heckmondwike factory, moving the head office from Leeds to Heckmondwike and quitting Polish manufacturing.

The Polish factory was only bought in late 2010, from weapons group Bumar, for 1m euros (£850m).

Last September 600 announced hefty annual losses because of the restructuring and the cost of the exit from Polish manufactu- ring.

[email protected]