West Midlands aerospace supplier Umeco reported a near 17 per cent increase in first half pre-tax profits, buoyed by the robust nature of its core market.
The Leamington Spa-based company, which last week announced a significant extension to a supply deal with Rolls-Royce, received a further boost yesterday with the announcement by the aero-engines maker of a £390 million contract to supply engines for the new Airbus A350XWB widebody airliner.
Umeco, which signed a five-year extension with Rolls-Royce last week that will take its existing contract out to 2015, said the work would be managed by Pattonair from its new £7 million facility in Derby, which is due to open next month.
It said yesterday's announcement was extremely good news for the company and under-scored the importance of securing a long-term supply deal with Rolls-Royce.
Chief executive Clive Snowdon said the deal would provide year-on-year growth for the foreseeable future.
"Our volumes with Rolls-Royce have the potential to grow significantly and this deal will further enhance the group's growth prospects," he said.
As well as its agreement with Rolls-Royce, Umeco is also a major supplier to both Boeing and Airbus on a range of aircraft where new orders this year are expected to exceed deliveries for the third consecutive year.
"The civil aerospace market is extremely robust. Both Boeing and Airbus have an order backlog of over 6,000 aircraft which will drive build rates over the next four-to-five years.
"So, we've got a pretty clear vision of where the group is going over the next few years," said Mr Snowdon.
More than 70 per cent of Umeco's business is derived from the civil aerospace market and Boeing and Airbus have indicated that they expect to deliver a total of 900 aircraft this year, compared to 831 in 2006.
Mr Snowdon said the six-month delay to the Boeing 787 Dreamliner aircraft, which is now unlikely to see delivery before the end of 2008, had only had a modest impact on the group.
"It's frustrating, but long-term prospects for the civil aerospace market remain strong," he said.
Umeco posted pre-tax profits for the six months to the end of September of £10.4 million, up 16.9 per cent on the same period last year and ahead of expectations.
The group, which recently sold its repair and overhaul division for £36 million, said revenue increased by 11.6 per cent to £176.7 million, compared with £158.3 million last year.
Mr Snowden said recent acquisition JD Lincoln, the US-based composite materials group purchased for £59.5 million, was performing well and that the company was eyeing up further acquisitions should they offer the correct growth potential.
The cost of the Lincoln purchase pushed group debt up from £51.8 million to £94 million, but following the sale of the repairs and overhaul business the figure is forecasted to fall to around £70 million by the end of March.
Analysts said the company's performance was solid and underpinned expectations for the full year.
Predictions for full year pre-tax profits averaged out at around £26 million.