Exclusive: AES sees sales pass £100m mark for first time

The group is on course to grow again in 2011 as it reaps the benefit of investing in technology at the height of the recession.

Parent company AES Engineering set up a subsidiary in Namibia earlier this year and it already has a presence in Botswana, Angola, Mozambique and Tanzania.

Managing director Chris Rea told the Yorkshire Post the “huge amount” of work in mining and minerals in Africa has created a major opportunity for the firm.

Sales at AES Engineering rose to £103.68m last year, up from £84.09m, while pre-tax profit rose 95 per cent to £12.97m, compared to £6.67m in 2009.

Mr Rea, who bought the Rotherham business in 1979 before transforming it into an industrial giant, said the 2010 results – which included positive cash flow, strong sales of high-tech equipment and exchange rate gains – represented a landmark for AES.

“It has been by far and away the best year we have had. We have had 30 years of turnover and profit growth (but) everything just came together.”

AES Engineering is the holding company of AESSEAL Group, a world leader in the mechanical sealing industry. Mechanical seals are used in pumps and rotating equipment to prevent liquids and gases from escaping into the environment. The group designs, manufactures and distributes its mechanical seals in South Yorkshire.

It sells to more than 100 countries in a range of industries including oil and gas, pharmaceuticals, chemicals, biofuels, power generation, steel production and pulp and paper.

Last year’s international success helped it grow its oil, gas, mineral and mining work.

“Africa has a huge amount of minerals and mining. We have grown enormously in minerals and mining in Africa,” Mr Rea said. “In South Africa we have got a fantastic group of customer service people and we are the number one supplier.”

The firm also achieved improved sales in fast-growing Brazil, where large amounts of offshore oil and gas have been discovered in recent years.

Although much of the growth was organic, the firm’s sales were also boosted by the acquisition of Ceetak Engineering Group, which is based in Bedford. The deal will help AES to develop its pump repair services.

Mr Rea, an Ulsterman who has often called for more sustained government backing for manufacturing, said AES had invested in equipment in 2008 which meant it could cope with rising demand when customers began re-stocking last year.

The firm bought two 9-axis machine tools at “the bottom of the cycle” and today they cost nearly £1m. It also invested in test equipment for dry gas seals, added Mr Rea, who highlighted the work of Richard Pickles, chief executive of AESSEAL International, Stephen Shaw, engineering director, and Jonathan Wilkinson, chief executive of AESSEAL plc, the UK arm.

Operating profit for 2010 was £12.40m, up from £7.95m, as a series of production improvements made the business more efficient.

AES has continued its strong performance since the year-end and achieved sales of £61m in the first half of 2011.

“It is a purple patch – the business is doing phenomenally well this year,” Mr Rea said.

In its’ directors’ report AES states: “Our customers have supported the expansion of our products, processes and the globalisation of our business. We believe this growth may continue in 2011 and beyond as long as we continuously improve every aspect of our business that brings a benefit to our customers.”

Listening the key to success

Chris Rea has long stressed the importance of getting the best staff as well as making the group’s products as good as possible.

When he helped launch the Yorkshire Post Business Club earlier this year, he told business leaders that successful exporting requires a particular attitude.

“You go, you talk to people, you listen to people, they tell you what they want, you listen and if you can do it, you give them what they want.”

Mr Rea was named Business Leader of the Year at the Yorkshire Post Business Awards 2007, organised by the Variety Club.