Profits are surging at Stadium Electronics

Feb 23 2010 by Chris Knox, The Journal

AN ELECTRONICS maker has said that its annual profits are expected to exceed market expectations by up to 15% after beginning work on a number of large contracts and basing more its of operations in the UK.

Hartlepool-based Stadium Electronics, which is due to publish its results next week, said that it expects profits before tax to be around £2.5m, up from the £2.2m predicted by brokers in September.

The company also said that it had managed to more than replace the 20 workers it axed last year as a result of the economic downturn, and that it expects to announce increases to its £47.6m turnover after landing a contract to produce components for the roll out of digital signage across the UK’s motorway network by the Highways Agency.

The firm, which also axed 200 workers from its 2,000-strong base in China last year, said that it had seen an upturn in the UK’s electronics sector over recent months, which has led to more investment in its factories in Hartlepool and Rugby, and hopes to create further jobs over the next 12 months. The bullish trading update saw the firm’s shares leap by more than 16% yesterday to close at 48.5p.

Other recent contract wins include work for Manchester-based Universal Metering to manufacture 30,000 water meters to be shipped out to parts of Africa and Brazil. The deal was the first major UK-based manufacturing contract for Stadium Group for several years, as most of its work is handled in China.

Chief executive Nigel Rogers said that the UK now represented 40% of its international operations, up from 20% 12 months ago, which has provided extra work for its Hartlepool operation.

The group has said that this reflects shifting market forces which are making it more expensive to manufacture in the Far East, with the value of the dollar and the euro forcing many firms to review their overseas manufacturing strategy.

Mr Rogers said: “We have turned our attention back to the UK, with a number of large scale contracts being handled at our Hartlepool factory.

“We expect profits to be up on last year’s predictions and are very much geared up towards growing the business in new areas.”

The firm’s UK operations have also been bolstered by the acquisition of Leicestershire-based company Fox Industries and Warwickshire-based Zirkon in 2008, with Stadium saying it was considering using cash reserves to make further acquisitions this year.

Mr Rogers also said that more emphasis on the health sector was likely to land the company three major contracts by the end of the year, work which would also be picked up by staff in Hartlepool.

“The medical sector is one that provides us with a lot of potential and we are in talks with a number of companies over products that would provide work here in the North East,” he said.