Automotive consultancy Ricardo is looking to boost its investment in the Far East, where rising orders from Chinese and Japanese car markets are helping to drive a recovery at the firm, writes Steve Pain.
The group works closely with the automotive industry in the development of new technologies and design. Its Midland technical centre is at Leamington Spa where it develops driveline transmissions and clutch assemblies for such vehicles as the new Ford GT and Bugatti Veyron.
Ricardo yesterday said orders from the Japanese market had more than doubled over the past six months and that Japan now accounts for more than ten per cent of the company's total forward order book - £60 million at the end of January.
"We see steady growth in this market over the next few years and together with an increased level of work from the Chinese motor industry we're confident this will help to underpin future orders and drive our recovery," said outgoing chief executive, Rodney Westhead.
Mr Westhead, who later this year will hand over the reins to Dave Shemmans, said the workload from China was approaching Japanese levels and that investment into the Far East - currently running at around £500,000 a year - may have to be stepped up.
"We're prepared to increase this level of spend if required," he confirmed after the release of Ricardo's interim results for the six months to December 2004.
These showed a sharp recovery in pretax profits before goodwill from £200,000 to £3 million. Profits last year were hit by the cancellation of orders and a reorganisation of the UK transmission business.
Mr Westhead said that while trading conditions were still "challenging", the group was now seeing the benefits of last year's cost-cutting programme. The group stripped out 225 UK jobs as part of a move to save £10 million a year.
Turnover declined from £77.3 million to £72.6 million in the first half. Earnings per share before goodwill amounted to 5.5 pence, up from a loss of 0.6p.
Ricardo maintained its interim dividend at 2.7 pence.
Meanwhile, Mr Shemmans will assume the role of chief executive when Mr Westhead retires at the completion of the company ' s annual meeting on November 4.
Mr Shemmans, who is aged 39, has been with Ricardo for six years.
He joined in 1999 as business development manager for Ricardo Consulting Engineers (RCE) and in 2002 became group business development director. In December 2003 he was appointed managing director of RCE.
Marcus Beresford, chairman of Ricardo, said: "Rodney Westhead has made an outstanding contribution to Ricardo and the group's development over the past 13 years.
"We are pleased that Dave has agreed to succeed Rodney and work with him until he retires at the AGM this November. His direct industry experience and knowledge of Ricardo make him an excellent successor and we welcome him to the board."