Charter plc Annual General Meeting: Chairman's Statement
26/06/2007
Charter plc is holding its 2007 Annual General Meeting at 12 noon today. At the meeting, David Gawler, the Company's Chairman, will comment as follows.
"I am pleased to report that 2006 was another highly successful year for Charter.
Results for 2006
The Company achieved excellent results with sales increasing by 18 per cent to £1,257.9 million, operating profits by 41 per cent to £143.2 million and adjusted earnings per share by 56 per cent to 67.2 pence per share.
Both of Charter's businesses, ESAB and Howden, have built successfully upon the restructuring efforts of recent years and have made the most of the opportunities presented by strong markets. Both businesses have achieved growth and have successfully improved their operating margins. In 2006, ESAB's margin was 11.9 per cent, compared with 10.3 per cent in 2005, and Howden's margin was 11.5 per cent, compared with 9.7 per cent in 2005.
Board
On 30 June 2006, I stood down as Chief Executive and assumed the transitional role of part-time Executive Chairman. The Board envisages that it will appoint an Independent Non Executive Chairman to succeed me sometime later this year.
Michael Foster, who previously had been Commercial Director, succeeded me as Chief Executive on 1 July 2006.
On 10 July 2006, James Deeley joined the Company as Legal Director and Company Secretary.
Current trading
I am pleased to report that in the first five months of 2007 trading in ESAB and Howden has been encouraging, with both businesses continuing to benefit from favourable market conditions.
Sales and operating margins in Europe, ESAB's most important region, have been strong in the dynamic Central and Eastern European markets and also in the more mature Western European markets. The profits of ESAB's North American business have also shown healthy growth in sterling terms, despite the comparative weakness of the US dollar. ESAB's businesses in South America and the Middle East have also performed well.
ESAB has expanded its welding consumables production capacity by some 20 per cent during the last 12 months, half of which was due to the opening last year of a new consumables manufacturing facility in China. Management envisages that, in the light of the current strong levels of global demand, ESAB will need to further increase capacity during the course of the next one to two years.
The order intake in Howden has continued to grow, especially in the North American power market and also in Europe. On 31 May 2007 Howden's order book was at the record level of £427 million, some 15 per cent and 18 per cent ahead of the respective levels on 31 May 2006 and 31 December 2006. Management envisages that the increase in the order book will principally benefit Howden's sales in 2008. Howden's year-to-date operating margins are ahead of those achieved in the first five months of last year.
In December 2006, Howden acquired the remaining 51 per cent of Howden Compressors Limited. This business has been successfully reintegrated into Howden and is trading ahead of earlier expectations.
ESAB India
Yesterday we announced a public offer for 20 per cent of ESAB India, a company listed in India. The offer is subject to various regulatory conditions in India and, given the uncertainty associated with public offers in India, the outcome of the offer will remain unclear for several months. Charter already holds some 5.7 million shares in ESAB India through a subsidiary, ESAB Holdings Limited, which represents 37.3 per cent of ESAB India's existing issued share capital. Assuming full acceptances, the offer would enable Charter to increase its overall indirect holding in ESAB India to a maximum of 57.3 per cent.
Outlook
Conditions across key markets in which the Company's businesses operate continue to be favourable. Forecasts of worldwide steel consumption and growth in worldwide coal-fired electricity generating capacity remain robust. For these reasons and given the initiatives underway in both ESAB and Howden to further improve operational performance, technology and brand strengths, and also the strong trading conditions experienced during the first five months of this year, the Board views the outlook for 2007 with increasing confidence."
Contact
Andrew Fenwick; Pamela Small, Brunswick +44 (0) 20 7404 5959
Forward Looking Statements
Certain sections of this statement may include forward looking statements that are subject to risk factors associated with, amongst other things, economic and business circumstances occurring from time to time in the countries in which the Company and its subsidiaries operate. It is believed that the expectations reflected in the statement are reasonable but they may be affected by a wide range of variables which are outside the control of the Company and could cause actual results to differ materially from those currently anticipated.