FKI Plc has seen an upturn in interim profitability due to refocussing on its core businesses and reducing overheads. Therefore operating profits for continuing businesses grew 12% or ?1m, before the adverse effects of exchange rates; after exchange rates fluctuations, the improvement was only 1.6% to ?18.8m, however. Pre-tax profits rose 18.5% to ?16m. Although the return on sales was up 32%, turnover actually fell 10.5% to ?332.2m due again to the impact of exchange rates and the planned sale of some businesses.
Borrowings reduced
Borrowings were reduced by ?10m, or 33%, at the half year stage to ?50m, while gearing dropped to 20%. The board recommended an interim dividend of 1.2 pence up from 1.0 pence in 1991, chairman Jeff Whalley said, to reflect these excellent results, which have been achieved during a period of widespread recession in our main markets in the UK and North America. FKI has restructured its activities now into five autonomous groups: automotive, engineering, process control, material handling and hardware. The Halifax, Yorkshire-based company is attempting to develop a more focussed approach to key markets, enabling it to respond quicker to changing market conditions by reducing costs. A considered pricing strategy is being implemented to improve margins. Process control now deals in cutting tools and computer peripherals. It continued to experience recessionary pressures, and therefore cost-cutting measures are under way at the moment. The Bristol Babcock process control activities are believed to present considerable opportunities for growth. Despite problems caused by rationalisation at the automative group in the US, it did return to profitability due to cost cutting and improvements in efficiency. The engineering group began to feel the effects of recession and saw lower sales volumes in some areas. However, improvements in productivity, quality of products and customer delivery, combined with significant export orders that offset reduced UK demand, meant that this division showed the best earnings growth. The materials handling group saw increased operating profits due to an improved pricing policy and cost reductions, including staff losses. Although order intake was 13% higher than this time last year, further cost-cutting will follow. The door and furniture hardware division remains the biggest contributor.
