It was a beautiful sunny day in Torquay at our venue overlooking the sea and Tim Hair, chief executive of Chamberlin plc had a good story to tell us.
Chamberlin was a sleepy, Midlands based metal basher from 1890 until 2006 when a new management team began to deliver a wake up call to this family dominated company. In the 4 years since, Tim Hair’s track record in delivering turnarounds and profitable growth has begun to work its magic and the company is now well positioned to reap the rewards of all that hard work.
Until a couple of weeks ago, Chamberlin shares had only one market maker and the buy/sell spread was unacceptable but a new market maker is now on board and the spread has narrowed considerably. It is private investors that set the price in small company shares since institutions simple play ‘pass the parcel’ when they buy or sell.
The company’s focus is ‘Difficult things done well’. As Mr Hair explained, any old fool can make a solid metal casting but it won’t sell for much and there is a lot of competition. The key to making good profits is to make technically demanding products, optimized for customers, and to give good customer service. This ethos applies in all five Chamberlin sites and is the reason why their automotive foundry is making high margins on their turbocharger castings.
The market for turbochargers is set to increase dramatically over the next 5 years due to emission regulation and Chamberlin is one of only 4 companies in Europe that can make the specialized castings they require. Independent studies say this market will grow by 70% in that period, and Chamberlin has recently landed a new customer which will, in due course, add £6m of revenue p.a. Bearing in mind that 2010 revenue was £28.5m in total, this represents a significant increase. And we were assured that the company now has the capacity to handle this flood of new orders.
Chamberlin’s recession was grim with output in some locations dropping by 75% between September 2008 and April 2009, but they have kept their skilled workforce by means of working less days in a month, and activity is now back to pre recession levels. A recent trading update confirmed that the group has returned to profitability, and the interim results in late November are something to look forward to.
In these difficult times, many of us are forced to look outside the UK for growth investments, so it is good to find one that is home grown.
This report is based upon a presentation at the UKSA October 19th seminar at Orestone Manor, Torquay
