AESSEAL takes market share from global rivals to continue UK success story

Chris Rea, managing director of AESSEAL
Chris Rea, managing director of AESSEAL
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AES ENGINEERING, one of the world’s largest makers of mechanical seals, seized market share from its three main rivals last year with a 7.4 per cent rise in organic sales.

The Rotherham business, founded and led by Chris Rea OBE, reported its 31st year of consecutive sales and profits growth in 2013.

The parent of AESSEAL saw total sales increase by 11 per cent to £146.5m, while core earnings rose by 3.4 per cent to £24.6m.

Mr Rea told The Yorkshire Post: “Lots of people would look at this business and think it is a dream. I look at the opportunities to do things better all the time. I think we could do a lot better.”

The 60-year-old entrepreneur described himself as very demanding, most of all of himself, and attributed the market-beating rise in organic sales to “great employees who are passionate, care about their customers and try very hard”.

Mr Rea added: “If one sector is not buying, they try to service another.”

AESSEAL is the world’s fourth-largest designer and manufacturer of mechanical seals for a wide range of industries, including oil and gas, food, water, mining and pharmaceuticals. Around 90 per cent of its sales come from overseas.

Mr Rea said the North American market is buoyant, largely due to the boom in shale oil and gas and the resurgent pulp and paper industry.

In South America, AESSEAL is very active in the oil and gas sector in Mexico and Brazil and is optimistic about Argentina following the lifting of import restrictions. But the group was hit hard by strikes by platinum miners in South Africa.

Mr Rea said the Middle East is very strong and remains a big opportunity; the company bought out its partner in a Saudi Arabian joint venture last month to become one of the few 100 per cent owned businesses in the region.

AESSEAL is doing well in Madagascar after winning work on a 30-year project, added Mr Rea. India is okay, China is weak but the Asean area is good, thanks to a strong regional manager in Malaysia, he said.

Mr Rea said the group has taken market share from rivals over the last three years with its rate of organic growth much stronger than the rate of growth in the market.

The company has invested £850,000 in a new machine tool for its factory in Rotherham and expects to add another 8-10 of these if it delivers the expected benefits in quality and throughput.

In spite of the advances, Mr Rea said the strengthening pound made it a tough year for the business.

He said the continued decline of medium and heavy industrial plants and processes in Britain has forced AESSEAL to focus on international markets.

“We have had to export or die,” he added. “We started life in the coal and steel community, if we had not exported out of South Yorkshire we would have died.”

Now 60 and a grandfather, Mr Rea said he had no plans to retire - “I would love to think I will still be here in 15 years” - and ruled out any suggestion that AESSEAL would join the rush of companies seeking a stock market listing.

“I will never run a public company because I speak my mind too much,” he said.

Mr Rea, the majority shareholder, said 3i retains a minority stake in the business and reckons at 17 years it is the longest time that the private equity house has held an investment.

AESSEAL completed two acquisitions last year - AV Technology in the UK and Atlantic Technical Sales & Service in the US.