Birtley cable firm AEI sails back into profit

Jun 10 2010 by Peter McCusker, The Journal

CABLE giant AEI of Birtley has returned to the black after plunging to a £1m loss when annual revenues fell by £16m during the recession.

The company says the recent slump in the construction sector forced it to diversify its work portfolio and this has seen it land one of its largest ever orders with an £8m naval contract.

In the year to August 31, 2009, the 170-year-old cable company posted revenues of £40m compared to £56m in the previous 12 months.

AEI made a loss of £1.2m over the same period compared to a profit of £4m in the previous year – but it has managed to avoided any job losses and still employs over 300 staff.

Earlier this year, it was awarded an £8m contract to provide the cabling and wiring for the Royal Navy’s two new aircraft carriers – HMS Queen Elizabeth and HMS Prince of Wales – which are currently under construction at a cost of £4bn.

Jim Duffy, AEI Cables chief executive, said: “We have been able to maintain full employment throughout this period and we aim to continue to do so.

“However, for some sectors in particular, such as construction, this is a difficult, vulnerable economic climate in which we are operating. We have compensated to some degree by the development of some specialised products into specific sectors such as defence and various industrial applications.”

The company’s performance in the last six months to the end of March 2010 has improved with £30m of sales and £300,000 of pre-tax profits.

Part of the fall in annual revenues can be accounted for by a sharp fall in the price of copper, however Mr Duffy says he remains cautious for the foreseeable future.

“Previously we were able to look two to three months ahead, but at the moment it’s a case of taking one day at a time. An order that was there one day might not be available the next, with some of our customers finding they cannot get the finance to press on with jobs.

“This year has got off to a good start but some of these sales are the results of orders which were placed last year.

“Our order book is marginally better than a year ago. The aircraft carrier order has been a substantial boost, but it’s still a tough market. Our strengths lie in our innovations, our designs and our expertise in specialist cabling areas. We reacted to the downturn by changing our business mix.”

AEI was bought for £14.5m by New Delhi-based Paramount Communications in 2007 after previous owners TT Electronics put it up for sale.

It is particularly concerned about the quantity of poor quality cables being imported from overseas and has joined a campaign by industry watchdogs pressing for tougher regulations.