West Midland aerospace component supplier Umeco has reported a 20 per cent rise in annual profits despite higher interest rates and delays in the delivery of key aircraft from both Boeing and rival Airbus.
The Leamington Spa-based company said demand withing the aviation sector was still robust and it remained well placed for substantial extra growth.
Umeco, which supplies small parts such as fasteners to aero engine maker Rolls-Royce and others, said pre-tax profit before exceptionals, amortisation and other items increased to £21.9 million from £18.3 million, based on an 18.8 per cent rise in revenue to £335.2 million. Operating profit on the same basis lifted by 26 per cent to £27.1 million and the company increased the total dividend by 9.7 per cent to 17p per share.
Chief executive Clive Snowdon said the company was now focused exclusively on composites and supply chain, and that its composites business had shown considerable growth, aided by the key acquisitions of Lincoln and Primco. In addition, the company's selection to collaborate on the Next Generation Composite Wing project with Airbus signified its standing within the industry.
Mr Snowdon said the business had also benefited from a strong showing by its supply chain division, which had been boosted by a major extension of its parts supply contract to Rolls-Royce.
The deal, agreed last year, has taken the existing contract to 2015. The work is being managed by Pattonair from its new £7 million facility in Derby.
"Demand for both our Composites and Supply Chain products and services continues to be buoyant across all our core markets of aerospace, high end automotive and wind energy," said Mr Snowdon.
"Recent strategic activity and investment has created a lean, well focused and financially robust group capable of high rates of organic growth. With strong forward order books, this leaves us exceptionally well positioned for another successful year," he added.
Despite delays to both the Boeing 787 Dreamliner and the Airbus A380 super-jumbo projects, the company said it remained optimistic about the future. "Both of these significant programmes are anticipated to generate a high level of incremental revenue for the group in the medium to long term," Umeco said in its results statement.
Around 70 per cent of all Umeco's business is derived from the civil aerospace market and with Boeing and Airbus saying they have something like a seven-year backlog of work- equivalent to around 6,800 planes, then major suppliers are confident of work for some time to come. Added to this, there has been a huge increase in new orders and the companies expect to deliver around 950 planes this year - compared with 831 in 2006.
Umeco said demand for composite materials in its high end automotive and wind energy markets also remained robust. The group supplies composites to Formula One teams including Team McLaren Mercedes.
The company added that it had appointed Andrew Moss, chief executive of the group's composites division since 1999, to its board as chief operating officer. In reaction, UBS said Umeco's full-year 2008 results were strong and slightly ahead of consensus.
The broker added that the underlying business was significantly more attractive following recent disposals, and organic growth rates were strong, and should accelerate over the medium term.
