WHEN Nigel Rogers became chief executive of machine tool maker 600 Group in March, he saw a business with some hefty problems but also big potential.
Yesterday shareholders saw that potential begin to emerge when the West Yorkshire-based company reported a return to half-year profitability, with earnings of £189,000 after restructuring costs and losses by now-sold assets.
The journey to this point has not been easy. It involved job losses, flogging off or closing non-core businesses, a management overhaul, cost cuts and a refinancing.
A costly expansion into Poland to take commoditised manufacturing in-house was reversed by Mr Rogers, the former Stadium Group CEO. He has streamlined and simplified manufacturing, letting Taiwanese contractors make its lower-margin metal turning machines. Instead, 600 is focusing on its bespoke computer-controlled lathes, which can sell for up to six figures, plus its precision components and laser marking business.
Surplus land and assets continue to be sold, with another £2.1m held for sale, and it has returned its headquarters from Leeds to Heckmondwike.
Meanwhile, core revenues have grown 9.5 per cent to £19.9m, and 600 Group is bullish about its second half. Debt is falling and even its UK pension scheme has a £7m surplus.
“My first impression was that there was a great business waiting to get out,” said Rogers, clearly a believer in UK manufacturing.
“We’ve managed that programme of extraction and have a great business ready to grow.
“We’ve definitely passed the bottom of the cycle in terms of the challenges that the business faced and the fundraising and restructuring of bank facilities was the final piece of the jigsaw. That sort of level of organic growth is certainly sustainable. It’s profitable and generating cash.”
The half-year results, covering the six months to the end of September, gave only a glimpse of the company’s potential as it was held back by a working capital shortage until the refinancing in early September.
Customers’ patience was “tested to the limit but not over it”, said Rogers, and now a backlog of orders underlines its optimism.
The next step is to utilise its listing to deliver significant growth. “We would hope over the next few months to be looking at other opportunities which could include acquisitions,” said Rogers, adding he believes its institutional investors will be supportive.
David Buxton, analyst at house broker FinnCap, said the results show new management has “taken strong steps to stabilise the business and now has considerable scope to improve returns”.
By focusing on what it does best, 600 Group is beginning to live up to its potential. A 23 per cent share price rise yesterday may be just the start of things to come.
From a journalist’s point of view it’s easy to see the life of the chief executive as being a pretty cushy one – six-figure salaries, bonuses, pensions, share options – the list is endless.
However a chat with Chris Davies at SIG, who is stepping down after 19 years with the company, makes Blackfriar think differently.
The thought of trying to manage the rollercoaster that has been SIG for the past five years would leave anyone cold while the living out of a suitcase for the previous 12 years also sounds a nightmare. Mr Davies deserves credit for steering SIG through a truly terrible patch as its markets dried up and rivals fell by the wayside.
He is leaving the company in an excellent position for when the market does finally pick up.
Blackfriar isn’t sure when it happened, but over the past few years the retail Christmas ads have become a far more significant water cooler topic than any X Factor or Strictly Come Dancing debacle.
The John Lewis ads are like Marmite – you either love them or hate them.
Blackfriar falls into the latter camp on the latest one involving a hardy snowman who searches the ends of the world in search of the perfect present for his snowgirlfriend. Pur-lease! Yes we know last year’s ad depicting the boy in search of the perfect presents for his parents last year was a huge hit but you can’t just swap him for a snowman.
Meanwhile, the Asda ones have been causing a real hoo-ha with claims of sexism.
It has to be said the Asda Mum looks pretty stressed out in the run-up to Christmas as her ungrateful family take all her sacrifices without so much as a thank you.
The sad truth is that the ads are based on research by Asda’s Mumdex, which reveals that the ads are a pretty true to life depiction for most mums.
By the way next time you watch the ad, check out the last few seconds.
Is granny really sitting on the sofa getting stuck into Fifty Shades of Grey?!