Engineering group Tomkins has reported an 11% profit increase despite the poor state of the global car market and the effect of hurricanes in the United States on raw material costs.
An increase in third-quarter pre-restructuring profits to GBP83.1m from GBP74.8m, announced yesterday (23 November), was attributed to recent business acquisitions.
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The company has substantial exposure to the American market, which has seen Ford and GM make cuts in production.
Tomkins seeks to increase sales by GBP175m in America from the acquisitions it has made since the end of 2004, such as belts maker Mectrol.
Sixty-five percent of Tomkins’ sales are in the US. The nine month group sales comprise of 26% building products together with 74% industrial and automotive products, such as car engines and air conditioners.
Tomkins spokesperson Robin Walker told just-auto: “Recent damage to General Motors and Ford is exaggerated but our main focus is to continue supplying the major manufacturers.
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By GlobalData“In the long term we see the automotive trade selling well but owe our recent profit increase to cost cutting in other areas and bolt-on acquisition of new businesses.”
Nine month profit for Tomkins has also increased by 0.7 % from GBP230.5m in 2004 to GBP232m this year, but it says its recent success in the face of hurricanes in the southern US is due to good contribution from new businesses in the US.
Tomkins cut costs by selling the gunmaker Smith and Wesson and the food group Ranks Hovis McDougall. It has also cut 3,000 jobs and closed a small windscreen wiper factory in Wales.
Company chief executive officer James Nicol said in a statement: “I am pleased with our overall performance given the adverse impact from the American automotive original equipment market and the effect of two severe hurricanes in the southern United States.
“I am particularly satisfied with the pace at which the recent acquisitions have been integrated into the existing businesses and have started to make contributions to group performance.”
Looking forward, the contribution from the recent acquisitions and actions taken to improve profitability during difficult market conditions are expected to result in continued progress.
Tomkins expects the year as a whole to remain in line with market expectations.
