Flowtech Fluidpower PLC (LON:FLO) Chief Executive Officer Sean Fennon caught up with DirectorsTalk to discuss their half-year report, strategy and developments and potential acquisitions
Q1: Sean, you’ve just published interim results, can you give us an overview of the first half year?
A1: I think the announcement today underlines the continued strong development of the group, especially when you take into the context of the economic turbulence we’ve seen probably over the last 18 month to 2 years I guess, I think it underlines the resilience of the business and the stability within our margins and I think the important thing to remember is we’re a high margin business and we’ve seen no major slip in terms of our growth profit margins. I think that’s reflected in our revenue growth in the first half of 28% and an underlying profit growth of 19% which, again, if you look at it from the backdrop of the marketplace it’s extremely pleasing. We’ve also seen some very good strong momentum within the new divisions, PMC and process, and what this has really meant is we’ve been able to increase our interim dividend by 5%.
Q2: So what’s been the strategy and what developments have you made so far?
A2: Our strategy remains clear, to develop a specialist fluid power group focussed on developing a channel strategy to widen our exposure to the marketplace, based around solid organic growth linked to complementary acquisitions. On top of that I guess the most important thing is people and the appointment of Nick Fossey, the original MD of the PMC Group, underlines our determination to increase the depth and the quality of our leadership across all of it. The intention is to understand the business drivers, understand how it’ll work together and for the best interests of the group but more importantly being able to utilise the strength of each of the businesses to deliver market-leading products and services to the marketplace. The other thing is that the further development of the division ideally with the acquisition of TSL which we made a couple of weeks ago, and that demonstrates the clear focus on creating a division which is able to deliver added value engineering services to a much wider customer base and that’s the thing about strong design and manufacturing capabilities. When we look at the process division, the acquisition of Hydravalve earlier this year again creates an anchor in the process division, a division that we know is growing strongly and Hydravalve is a business that’s well-established, it was formed in 1988, has a very strong technical reputation within its own sector and we believe it gives us great advantage in terms of end users and OEM’s across the industries. So all in all I think our strategy is working, we’ve taken 6 acquisitions so far, we’ve integrated them very quickly, we see the benefits in both margin and EBIT and we’re very satisfied with our first 6 months performance.
Q3: What can you tell me about future developments and possible acquisitions in the pipelines?
A3: Yes, I have to say that our pipelines are extremely strong, we’re always looking for acquisition opportunities particularly if they complement the group as a whole and can fit our overall channel strategy. That strategy hasn’t changed from float, we came to market explaining the way that we’d lead that channel strategy and we’ve continued that process, we believe that a really strong group with complementary businesses can offer the market a much wider set of products and added value services. I would say that our pipeline can only get stronger, I think there are lots and lots of opportunities for the group to grow and we feel very confident that in the next 6 months we should see some of our acquisition activity converted into other group companies.
