Trifast (TR) has seen organic revenue growth, inventory capacity growth in Italy and Singapore, and profit before tax ahead of expectations, according to its trading update, issued ahead of its official financial year publication in June.
TR saw good growth across a number of key markets, particularly in the automotive sector with double digit growth in its Dutch and Swedish operations. TR said the new green field location in Spain and the Innovation & Technical Centre in Sweden's electric vehicle development area (in Gothenburg) were exciting prospects for further growth in the region.
Following the stronger second half, the UK saw robust year-on-year organic growth "reflecting a targeted approach aimed at growing both core Multinational OEM customers and our European distributor sales". Planned production volume changes in the diesel automotive sector are expected to have a relatively minor impact.
On both an AER and CER basis, TR had "an encouraging finish" to the financial year ended 31 March 2018. Group underlying profit before tax was slightly ahead of expectations and all of its main locations (excluding USA) delivered growth in profits, with each location contributing to the Group’s trading results.
Asia - support from new warehouse in Shanghai
Asia performed well domestically and internationally. TR saw solid year-on-year CER growth, particularly across its key domestic appliances and automotive sectors. As expected, the strong double digit growth in H1 was not sustained into H2, largely due to ongoing reduction in demand at one of the region’s key automotive customers as a result of its own restructuring programme, coupled with the impact of deliberately reduced volumes following an e-bidding process at an electronics Multinational OEM customer. TR said it doesn't and will not chase volume over margin and so will continue to walk away when pricing becomes unsustainable. "Looking ahead, our new warehouse in Shanghai is already providing additional support for our ongoing strong automotive growth in mainland China and Japan. Furthermore, the significant capital investment we have made into our manufacturing facilities in Singapore will also start to feed through into margins over the coming financial year."
USA - New warehouse and office in Houston
Following the impact of Hurricane Harvey last year, TR's North American operation is recovering well with strong year on year CER growth being driven from new automotive wins in the region. TR plans to carry on investing to build the local team and to support future growth in this important market and we are excited to announce the opening of a larger TR warehouse and office site in Houston this month.
Acquisitions
TR noted growing demand for stainless steel fastenings from several of its Multinational OEM customers, as these products are able to offer a fully recyclable, high strength and corrosion resistant fastening solution. That fed into April's acquisition of Precision Technology Supplies Limited (PTS), a key supplier and distributor of stainless steel fastenings in the UK and, holding one of the widest product ranges of any supplier in Europe.
TR said: "The opportunity to expand our knowledge base and acquire highly skilled and experienced people in this key area of the market provides an exciting proposition and a foundation to further growth. The team at PTS and TR are delighted to have joined forces and this represents a great opportunity to further support our fast growing distributor sales which in the year ended 31 March 2018 accounted for c.10% of Group revenue. Not only is it expected that PTS will be earnings enhancing in the financial year ending 31 March 2019, it will also strengthen the Group’s position when it comes to future sourcing synergies."
The Group’s balance sheet continues to be robust with the capacity to fund both organic and acquisition growth, TR said. During the financial year it have initiated a number of significant capital investment projects: "Our previous investments, most specifically into our Italian manufacturing operations, are already delivering capacity benefits and the completion of the mezzanine expansion at our Singapore manufacturing facilities was successfully achieved just ahead of the year end. Further warehouse expansion plans are underway in Holland and the USA in this current financial year.
"As previously highlighted, the Group has spent time during FY 2018 considering how best to integrate and develop the Group’s existing IT infrastructure. This project is essential to support our ongoing growth plans and to meet the evolving needs of our Multinational OEM customers. This will be an area of significant investment, underpinning our future growth strategy, and we look forward to updating shareholders further when we report our full year results in June."
Summary and outlook
"Overall, the Group has performed well this year and will deliver trading results for the financial year ended 31 March 2018 slightly ahead of management expectations.
"There are, of course, some macroeconomic factors we cannot fully mitigate, including the ongoing volatility in the foreign currency and raw materials markets, and the wider potential implications of Brexit on our business and the UK economy. Nonetheless, we enter this new financial year confident in our growth prospects and the delivery of our strategic objectives.
"We continue to believe that our experienced business teams, coupled with our wide geographical and sector coverage will give us the ongoing flexibility and foresight to meet both the many opportunities open to us as well as dealing with the macroeconomic and political challenges that could lie in front of us."
