Polypipe plc plans to spend as much as $13 million this year on acquisitions in bathroom and kitchen products, civil engineering or leisure goods sectors.
The firm is so pleased with its acquisition program so far and with the returns from its new operations that it wants to strengthen its position in those sectors with other takeovers, according to Polypipe Executive Chairman Kevin McDonald.
However, Polypipe of Doncaster, England, reporting its half-year results to Dec. 31, revealed that profit was hit by a 10 percent rise in the cost of PVC, tougher competition in the pipe market and losses suffered by its Polish subsidiary.
In the last six months of 1997, Polypipe Poland Sp. z o.o of Wroclaw, Poland, which manufactures twin-wall drainage pipes for road construction projects, lost nearly $500,000 in business due to Poland's severe flooding problems, the company reported.
McDonald added that economic difficulties in France led to reduced margins for Polypipe's pipe extruding and fittings business. But he expects improved results there and in Poland in the fiscal year's second half.
Polypipe is set to take full advantage of its latest acquisition in mainland Europe — that of the central heating pipe and telecommunications trunking molder Gabo Systemtechnik GmbH of Bogen, Germany, which is near Munich. The company announced that deal in December.
The British firm this year is introducing extruded polybutylene hot and cold central-heating pipe systems, similar to those Gabo makes, in the United Kingdom.
Polypipe intends to expand in Europe to prepare for new opportunities that are likely to open up when the European Union introduces standardization of pipe gauges in the next two years.
The company expects to make new acquisitions amounting to between $6.8 million and $13.3 million by year-end to take it into promising new markets, according to James Corr, finance director.
He added that Polypipe hopes to complete another takeover deal, for a United Kingdom-based firm, by June, and others could involve mainland European acquisitions later.
The British molder, which also produces toilet seats, profiles, and plastic garden furniture, reported that half-year sales rose 28 percent to about $200 million, while pretax profit climbed 6.2 percent to $20 million.