UK-based components and logistics specialist Umeco has gone through some major changes since chief executive Clive Snowdon joined in 1997, writes Helen Massy-Beresford. Turnover grew from £10 million ($18.7 million) to £90 million between 1997 and 1999 and, announcing full-year results in June, Snowdon described the 21% increase in revenues to £293 million as "excellent".
Umeco has built itself up through strategic acquisitions, focusing on the three key areas of its core business: components, composites and repair and overhaul.
Now the company is strengthening its business both at home and abroad. In the UK, it is in the process of expanding the Derby facilities it needs to service major contracts with Goodrich and Rolls-Royce, which "is growing hugely at the moment", Snowdon says.
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| Snowdon: planning further growth through acquisitions |
The company's ranking by margin has slipped from 64 last year to 71 in the latest scoreboard, but in the main Top 100 ranking by revenue, Umeco has climbed from 79 to 74.
The company has begun to focus on just-in-time parts distribution, and it is through this branch of its business that Umeco is aiming its services at a rapidly growing aerospace market in China.
The company hopes to win business from Chinese and Western customers located in the same business park as its base in Xian, which covers the chemicals and components sides of the business. "We're pretty close to our first sizeable contract," says Snowdon, who hopes the Chinese facility will provide between £500,000 and £1 million in sales in the first year of operation, growing to a £5-10 million over five years. Umeco should be able to fulfil the role of "corner shop" for the other businesses that will occupy the site, Snowdon says.
The Middle East is also firmly in the company's sights. "In a 10- to 20-year view there will be more aircraft made and sold into Middle East and Far East than anywhere else," Snowdon says, adding: "The Indian market is opening up very quickly now."
In the lucrative and growing composites sector, the opening of a new facility in September will increase the company's capacity by half. "We're working close to capacity now. Given that composites will continue to develop we need that capacity now," Snowdon says.
Following recent purchases in the composites and chemicals sectors, Snowdon confirms Umeco is planning further growth through acquisition. "We have a good acquisition pipeline," he says. Next on the horizon is a small company based in the USA and operating in the composites field.
The recent signing of a three-year contract with Virgin Atlantic Airways for the supply of chemicals should lead to further business in the future with the airline and with other customers, says Snowdon. "As Virgin expands its fleet we hope they will expand their purchases," he says, adding: "a prestige customer like Virgin always has a halo effect."
Around two-thirds of the proceeds of the company's recent rights issue are to be used to fund the purchase, and Snowdon is keen to complete the deal by the end of the year to reassure investors growing impatient at the slow speed of the acquisition process. Once complete, the purchase should give Umeco access to a range of composite materials it currently lacks, says Snowdon.
Source: Flight International
