Dutch group helping to maintain confidence in telecoms sector
Added: (Wed May 02 2001)
Pressbox (Press Release) -
A 40% increase in worldwide fibre optic network investment helped the Dutch technology solutions supplier TKH on its way to a EUR 30.8 million net profit, an increase of 3.1%, its annual results announce.
The group, which owns UK data cable manufacturer PIC, saw total turnover increase by 11.9%, and is confident of favourable market conditions throughout 2001.
Cable production continues to be the group’s backbone, accounting for almost 44% of the total turnover and reflecting the on-going global push to modernise existing telecommunications networks, as well as rolling out totally new systems in "tiger" economies like the former Eastern bloc countries. Poland, for example – an increasingly important market for TKH – sees a million new telephone lines installed every year.
TKH has also made much of its expertise in the special cable market, developing specific cable solutions for the medical, automotive and robotics industry. Of particular interest is a specially-designed cable for use in UMTS networks – the 3G mobile communication protocol that operators are now beginning to roll out across Europe.
Shortages of raw materials – preforms – have limited the cable division’s growth of turnover and profit. Fibre optic production in the group’s Netherlands plant has been below capacity, although a new plant at Haaksbergen has expanded production of fibre optic cable.
Outside Europe, South East Asia is proving a fast-growing market, vindicating TKH’s decision to site a new fibre plant in Nanjing, China. Although suffering from the same preform shortage, investments totalling EUR 25m have expanded the fibre optic capacity to 2 million kilometres/year, with cable production at 15,000 km per year.
Restructuring, reorganisation and heavy investment in new plant have put the UK arm, PIC, in a loss situation this year. However, replacement of management and a reduction in the number of employees has seen productivity increase by 56%. The company now intends to focus on the high-added value datacoms market with its quality cable range, and has a number of innovative products coming to market.
John Boon, PIC’s managing director, believes that the group is well-placed in its specialist markets. "From 2001, we’ve decided to increase the market orientation of the whole group – setting up market groups, placing greater stress on ourselves as a supplier of systems and networks. Our research and development commitments have ensured that we continue to roll out an advanced range of products and services, and we’re growing our market position very comfortably in the key Asian and Chinese markets.
"The group is confident of achieving a 15% per year increase in turnover, through growth and acquisitions. This should allow earnings per share to grow by at least 10%."
Dividends of EUR 1.36 per ordinary share will be proposed at the general meeting of shareholders to be held on 24 May, 2001. An interim dividend of EUR 0.62 was made in September 2000, with the final dividend to be paid either EUR 0.74 in cash, or as shares.