Manufacturer enjoys 31st year of profits growth

The privately-owned Rotherham-based group makes and sells high-specification engineered seals for a wide range of process industries, including petrochemicals, food, drink and pharmaceuticals.

Sales surged 19.5 per cent in 2011 to £123.9m and underlying earnings were up 22.9 per cent to £22.8m.

The vast majority of its products are exported, and AESSEAL said its global reach helped it record unbroken year-on-year growth in sales and profits throughout its history.

Around 14 per cent of sales come from North America and another 14 per cent from the United Kingdom. Ten per cent of sales hail from South Africa and about seven per cent from Germany.

The business has around 400 sales staff spread across 30 subsidiaries around the globe.

“We’re growing into that footprint,” said chief executive Jonathan Wilkinson. “We’re getting growth in the business in every territory.”

The company is seeing 40 to 50 per cent growth in China. “India and China are markets where we have great potential,” he said.

AESSEAL grew its workforce by five per cent in 2011, and now has more than 1,330 employees. Its Yorkshire workforce now totals 342, up from 290 at the end of 2010.

The business is majority owned by founder Chris Rea, with the rest held by private equity firm 3i.

Mr Rea, managing director, said: “Whilst the UK economy hovered on the edge of recession for much of 2011, at AESSEAL we have managed to further strengthen our global sales.

“This is through continued investment in our customer value proposition. We have made significant product technology and customer service infrastructure investments over the last decade, and I believe we are seeing the benefits.

“I also believe that more businesses need to operate a culture of empowerment – particularly within international markets.

“People need to take ownership of the results, supported by competent management and solid processes from the central organisation.

“Too many international businesses either exercise too much or too little control. At AESSEAL we place a huge amount of importance on empowerment, but with high standards and robust processes.”

Mr Wilkinson said strong growth looks set to continue this year.

“We’re going to be hitting double-digit growth again this year,” he said. “We’re into the 31st year of unbroken sales and profits growth. It’s a record we’re quite proud of.”

Despite recent weakness in the oil price, he added oil and gas companies are still investing in exploration. The sector contributed 25 per cent of the group’s sales growth during the year.

“We’re still in the region where investment plans make sense.”

AESSEALS, the fourth-biggest firm in its sector, has boosted growth through acquisitions in recent months. It bought pump repairer and supplier Absolute Vacuum at the start of the year for an undisclosed sum.

“Our plans show that the bulk of our growth will be organic,” said Mr Wilkinson.

“However, things come along from time to time. We’re very opportunistic when it comes to acquisitions.”

The company’s high-tech manufacturing is done in the UK. It is currently looking at expanding manufacturing into the US, but Mr Wilkinson said this will be in addition to UK work, and cover adaptive projects where seals are tailored to customers’ specific requirements.

Net debt ended the year at around £16m, down from about £19m a year earlier.

Ken Beaty, partner at 3i, said: “It is encouraging to see an example of a UK manufacturing business bucking the trend to succeed internationally in today’s challenged economy. This is a result of an outstanding management team, a leading market position and continued focus on quality and service which is reflected in AESSEAL’s consistent 20 per cent compound annual growth rate.”

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