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Shares on a roll as Wagon reveals buy-and-sell plans.

Shares in Birmingham-based engineering group Wagon rolled up 11 per cent yesterday as the group unveiled plans to sell its peripheral Coventry-based railway business and buy the French market leader in car door systems.

Chief executive Mr Nick Brayshaw said the group had already acquired a 20 per cent stake in French company Aries for pounds 8.5million, and had options either to buy the rest of the company or to sell the stake within the next year.

The planned sale of the precision engineering division comprising Oleo, the railway buffers business in Coventry, together with German precision engineer Forkardt, was likely to generate profit, he said.

This would contribute a little towards the pounds 34million needed to acquire the rest of Aries.

First-half profits nearly doubled to pounds 9.5million from pounds 5.5million, however, there was an exceptional provision of pounds 5.1million last time for the costs of the acquisition of UK storage products business Polypal.

Before exceptionals profits rose six per cent to pounds 11.2million, which was largely owing to the contribution of German and Belgian automotive components supplier Ymos, acquired in June, which has now been integrated with Wagon's existing Edward Rose business at Brownhills and its France-based Farnier Penin business. Ymos contributed pounds 20million to a total pounds 80million in automotive sales in the first half and is exceeding expectations for second half sales.

Mr Brayshaw stressed that the group had fundamentally changed, with over half its business now based in continental Europe, compared with only 30 per cent a year ago.

Wagon's dependence on Rover is thus reduced and now accounts for 15 per cent of sales.

The door systems business had won new orders from manufacturers including VW, Audi, Mercedes-Benz, Peugeot, Renault and BMW, Mr Brayshaw said.

In the pressings business, engineers from the group's factories have been centralised on one site in Warwick to supply customers like Rover.

The UK market for pressings had declined, he said, and the group was cutting overtime and temporary labour as a response.

However, one analyst who did not want to be named, warned that most of the growth could be accounted for by the new Ymos acquisition.

But he said Wagon's move to sell off precision engineering and buy the French door systems business made good strategic sense.

This together with Mr Brayshaw's bullish prediction drove the share price up 10p to 204p against the market trend.

Shareholders get an unchanged interim dividend of 7p.
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Publication:The Birmingham Post (England)
Date:Dec 2, 1998
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