Leap in profits sees MS forging ahead

The Doncaster-based group, which makes products including guns used on naval destroyer ships, said profits before tax and exceptional items surged 60 per cent to £4.09m in the six months to the end of October.

Revenues increased 10 per cent to £27.86m, and the group hiked its interim dividend to 1.5p from 1p a year earlier.

“The board is confident as to the full year outlook for the group, but clearly, the prolonged macro-economic turmoil is not helpful in offering any real degree of certainty beyond that timeframe,” said chairman Michael Bell.

“Nevertheless, the group... is in robust condition, vigilant and ready to adapt to any shifts in market conditions.”

Shares in the company climbed 2.5p to close at 300p last night.

MSI’s defence business, which makes small and medium-calibre guns for naval vessels, started the half with a “substantial” order book and a “well-balanced programme of output to meet contract obligations throughout the current year”.

Last year MSI announced a $28.64m contract by the United States Navy to provide 30mm naval gun systems, a contract due to complete by December 2011.

The group said the division delivered “another strong performance” but its profits and sales did not quite match a year ago because of the timing of orders. These hit £2.86m and £14.45m respectively.

MSI’s forgings arm, which makes components used in a wide range of industries including forklift trucks, increased sales to £7.86m from £5.97m a year earlier. It returned profits of £501,000 versus £292,000 losses a year earlier.

Mr Bell said: “This positive progression follows through from the sustained investment and development within the division’s businesses, here in the UK and those of our operations in both North and South America.”

MSI’s petrol station forecourt arm also returned to profit, earning £840,000 versus a £201,000 loss a year earlier. Mr Bell said it has “flourished” since becoming a wholly-owned subsidiary last year.

“Restructured and redirected with a firm focus on operational performance and product development, operations in both the UK and Poland have grown revenue and returned a notable profit contribution to the group,” he said.

The division designs and makes forecourt canopies in both the UK and Poland, working for firms including Tesco, Shell, BP and Sainsbury’s.

MSI bought the remaining 50 per cent of Global-MSI from Portman International Securities Limited for £4.5m last year. The division had gross assets worth £2.4m and added £200,000 to MSI’s annual profit. At the time MSI said it will “benefit from a highly-focused single party ownership”.

Mr Bell said the combined profit contribution from its forgings and petrol station industrial engineering divisions of £1.34m is encouraging “particularly in this squally economic environment”.

He said the company is in better shape, with a more balanced business.

“As we enter the second half of the year, overall the group is in good shape,” he said.

“The balance sheet is strong and the order book is better balanced over the three divisions than has been the case for some considerable time.

“Defence has a formidable base load of business for the remainder of the year, providing a good measure of certainty.

“Forgings has a higher value order book than has been the case for many months, despite the visibility remaining characteristically very short term.

“The two petrol station superstructure businesses should also benefit from a good workload in hand with some further opportunities anticipated.”

MSI ended the period with net cash and short-term deposits of £7.67m, down on the £9.88m figure six months earlier.

In September, Mr Bell bought another 10,000 shares in the company to lift his stake to 26.2 per cent, following a batch of 5,000 shares bought in August.

An international drive

MS International operates across three divisions – defence, forgings and petrol station superstructures.

It employs about 375 staff. Exports account for some 60 per cent of group sales. Headquartered in Doncaster, its forging arm has a range of open die forging hammers ranging from one to five tonnes. Its petrol station forecourt business also makes structures for car wash buildings, golf course driving ranges and car dealerships.

Its defence business has been producing components for the military for more than 100 years. Early products included searchlights used in the 1940s.

The division’s Seahawk weapons system is used by 14 navies worldwide.