Components manufacturer Elektron said yesterday that its order books going into the second half were 5 per cent ahead of last year.
The firm, which makes switches and indicator lights for household appliances such as coffee machines and laser printers, reported an operating profit of £1.02m in the six months to 31 July up 5 per cent from £972,000 a year ago.
The Essex-based group, which manufactures and designs more than 4,500 products, is considering acquisitions or a possible share buyback as a way to use its cash, rather than paying an interim dividend. But shareholders could be rewarded at the end of the year with a higher final dividend.
Executive chairman Adrian Girling said gross margin improvements — up from 34.8 per cent to 38 per cent over the piece — would continue to be underpinned by the transfer of “hand assembly offshore”.
It has also been recruiting engineers and developing new products via the newly formed division, Elektron System Components. Its first product launch, a waterproof Bluetooth wireless connector, will be launched this month.
Girling said the combination of the strengthening dollar, upward revaluation of the Chinese yuan, and expected Chinese wage inflation, meant Elektron was well positioned to compete in a global market. It is balancing automated manufacturing in Britain with hand assembly in China and Tunisia. “These trends favour our business model,” Girling said.
Injection moulding has started in China and will start in Tunisia in the second half.
“With order books 5 per cent up on this time last year and new products coming on-stream in the second half, I am expecting continued improvement in the full year results,” Girling said.