Tomkins Eyes Asia for Sales Expansion

Engineering company Tomkins expects 20 percent of its sales to come from Asia within five years, as it expands aggressively in China and India, helping offset a weaker U.S. automotive market. Tomkins' sales rose 28 percent in China and 25 percent in India in 2005 when the company made seven percent of its turnover from Asia.

From Birmingham Post

Engineering company Tomkins expects 20 percent of its sales to come from Asia within five years, as it expands aggressively in China and India, helping offset a weaker U.S. automotive market.

Chief executive Jim Nicol said Tomkins – formed out of a Walsall buckle-making firm – wanted to expand in high-growth markets through existing businesses and acquisitions, particularly in industrial and building products.

Tomkins’ sales rose 28 percent in China and 25 percent in India in 2005 when the company made seven percent of its turnover from Asia.

“I suspect that with that growth rate and some acquisitions, 20 percent of our sales will come from China and India in five years,” Nicol said. “Not since the 19th century in the U.S. have you seen an opportunity for economic expansion like you see now in China and India.”

Tomkins, which sells parts used in car engines and air conditioners, last month reported a 1.4 percent rise in annual operating profit after income from new acquisitions and price increases helped offset a weak North American automotive market and higher material costs.

A mean of analysts’ forecasts points to profit from operations and before restructuring for 2006 of about $589 million, compared to about $538 million in 2005.

Nicol said Tomkins was on track for new acquisitions to add up to $500 million to group sales a year following its acquisition on March 1 of U.S. manufacturer Selkirk.

It wants 4 to 6 percent of its growth to come from existing businesses and the rest from acquisitions. Nicol said Tomkins favored outright buys but would also consider joint ventures where it had management control. He also said the company was looking at setting up new manufacturing plants in Eastern Europe and Asia. The company has also shed more than 3,000 jobs and sold non-core businesses as part of a revamp.

Slowing production at auto giants Ford and General Motors, which are struggling with the loss of U.S. market share to foreign rivals, have slowed the pace of Tomkins’ earnings although Nicol said this has been offset by price increases. Tomkins makes 65 percent of its sales in the U.S.

He also said the impact of raw material costs would be benign this year.

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