While turnover at industrial automation group Eurotherm Plc may be flat, interim profits have risen due to careful cost controls and more efficient use of resources. Cost-cutting over the past 18 months has increased profit margins substantially and virtually eliminated borrowing. Gearing now stands at 2.9% compared with 25.3% in 1992. The Hove, Sussex company saw pre-tax profits rise 37% to UKP9.2m, while sales were up 3.8% to UKP81m. And in light of the interim results and the group’s prospects, the board is recommending an interim dividend of 3.5 pence, an increase of 16.7% on the previous year. While chairman Jack Leonard stated that Eurotherm is significantly more efficient than at any time in our history, he realises it will need to be innovative to resume sales growth. The world economy, he said, is still patchy, showing mixed signals as far as recovery goes. Although trade into the US and UK markets increased slightly, revenues from continental Europe, particularly Germany, were down. Business from China is, conversely, growing in leaps and bounds. So, in an attempt to both increase volume sales and grow margins, Leonard said, the group intends to ramp up its marketing activities. He wants to see net margins increase from the current 11% to about 15% over the next 12 months. This, he said will mean concentrating investment on the fastest growing parts of the business, such as controls for AC electric motors. Moreover, while process automation systems have not been selling well lately because of the huge capital outlay involved, he believes the market will pick up in the near future as customers’ existing equipment starts to age and needs replacing. As for the short-term prospects, he expects progress to continue throughout the remainder of this year provided there is no marked deterioration in the international trading situation.
