FKI Plc - Company Profile, Information, Business Description, History, Background Information on FKI Plc

15-19 New Fetter Lane
London EC4A 1LY
United Kingdom

Company Perspectives:

FKI's strategy is to continue to build through investment and technology, an international engineering group concentrating on specialised sectors where its businesses have strong market shares and opportunities for growth. The group is focused upon understanding the needs of customers and ensuring that it is an efficient supplier of the best products and services.

History of FKI Plc

FKI Plc has evolved into one of the United Kingdom's major engineering groups. The company's array of some 70 subsidiaries operates in four primary business divisions: Lifting Products and Services; Logistex; Hardware; and Energy Technology products. These operations combined for a total turnover of nearly £1.5 billion ($2.3 billion) in 2003. FKI Logistex offers automated logistics and sorting products and systems for baggage handling, freight and parcel services, warehouse and distribution facilities, and manufacturers. This division, the company's fastest growing and most profitable, contributed 30.5 percent of FKI's revenues in 2003, and is one of the world's leading logistics systems producers. Lifting Products and Services holds the world's leading positions in lifting products and large shears, and the worldwide number two spot in chains and lifting gear, and generates more than 28 percent of company revenues. The company's Hardware division produces fittings for windows, screen and storm doors, furniture, and ergonomic hardware, holding the number one position in the United States for most of its products, and leading positions in Europe as well. That division contributed 18 percent to the company's revenues in 2003. Last, FKI, through its Energy Technology division, is the world's leading supplier of turbogenerators, and produces a range of electrical and other power generating machinery and infrastructure equipment. That division, which focuses on the North American and European markets, produced more than 23 percent of the group's sales in 2003. FKI Plc's growth has been fueled by a steady stream of acquisitions in the late 1990s and early 2000s. The company is listed on the London Stock Exchange.

From Parking Meters to Conglomerate in the 1980s

FKI's origins trace back to 1920, when the company was first registered under the Fisher name. Over the next several decades it specialized in the manufacture of parking meters, under the Karpark name. By the 1960s, the company became known as Fisher Karpark Industries. In 1973, Tony Gartland and Fred Berry took control of the company through a management buyout, ultimately changing its name to FKI Electricals. Gartland's share of the company topped 50 percent.

FKI remained a small company focused on parking meters through the 1970s. In the early 1980s, however, Gartland decided to take the company on a drive for growth. As part of that effort, the company acquired a dormant public company, Woodland Securities, which had originally operated rubber plantations in Sri Lanka. The reverse takeover enabled FKI to achieve a listing on the London Stock Exchange's Unlisted Securities Market in 1982. Joining Gartland in the quest for growth was Jeff Whalley, who had formerly worked at Babcock International, then one of the United Kingdom's leading engineering groups.

The listing enabled the company to begin making acquisitions, such as the purchase of the money-losing English Numbering Machines, part of the Rank Organisation, for £1.3 million in 1982. FKI quickly reorganized its new operations, which became profitable by the following year. The company then applied for a listing on the London main board that year.

Other acquisitions followed, including 1984's Burndept, in a cash and share deal worth nearly £3 million that extended FKI beyond its core parking meters business and into the manufacture of radio communications equipment. The company's growth accelerated in the mid-1980s, as its revenues topped £18 million in 1985. Acquisition remained at the center of the company's growth strategy, and included the mechanical engineering and components division of Thorn EMI Plc, for which FKI paid approximately £10 million in 1986. The following year the company acquired Froude Consine, which produced dynanometers and other vehicle testing equipment, before buying up Stone International for £36.6 million in July 1987. That acquisition formed the basis of the company's new air conditioning division.

Just one month later, however, FKI launched a takeover bid that was to transform--at least temporarily--the company. In August 1987, FKI offered to acquire Babcock International, which, although its revenues were some seven times greater than FKI's, had fallen into financial difficulties by then. The deal went through for a total price of £416 million, and the newly enlarged company adopted the name FKI Babcock. Gartland and Whalley remained in control of the new company, which now took a place among the London exchange's prestigious FTSE 250 index.

Focusing for the New Century

Gartland and Whalley quickly hit a snag, as the stock market crash of October 1987 sent the company's share price reeling. The company continued to receive the cold shoulder from the investor community--which had begun to turn its back on the diversified conglomerates that had been popular in the United Kingdom in the 1970s and early 1980s. In response, FKI began a deep restructuring drive, trimming away a good deal of its Babcock side. By the beginning of 1989, FKI had shut down some 25 of Babcock's manufacturing plants.

FKI went still further in its drive to appease investors. In 1989, the company completed its restructuring by splitting the company in two. FKI Plc took over the group's core manufacturing operations, while its large-scale engineering projects division was split off into a new Babcock, which was then floated as an independent public company. FKI also planned to sell off its U.S. industrial assets, but abandoned the plan in 1990 amid the market downturn.

Unfortunately for Gartland, FKI's profits continued to struggle amid the harsh economic climate, and after posting a fresh profit dip in 1991, Gartland stepped down from the company. Whalley took Gartland's place as chairman and, in 1992, brought in Bob Beeston as CEO. Formerly part of another British conglomerate, BTR, Beeston continued the streamlining program set in place under Gartland. In December 1991, the company sold off its Stone air conditioning business, which by then had grown to four companies operating in the United States, the United Kingdom, and Spain.

As Whalley ceded day-to-day management to Beeston in the early 1990s, FKI continued streamlining its operations in order to shed its image as a conglomerate and emerge as a focused engineering group, emphasizing its operations in lifting and handling, hardware, automotive parts, and electrical engineering. By the middle of the decade, the company had built up a war chest of some £300 million and prepared a new round of large-scale acquisitions.

In 1995, the company acquired lifting specialist Amdura, based in the United States. The following year, it paid £52.3 million to acquire Italy's Nuova Marelli Motori, which manufactured low-voltage electric motors and related components for forklifts and other lifting equipment. That year also, the company paid £182.5 million for Hawker Siddley, which had been operating as the Electric Power Group of BTR Plc, and also acquired furniture hardware producer Wright Products, based in the United States.

Not all of the company's expansion efforts were successful--in 1997, the company was forced to back down from a hostile takeover attempt for door fittings company Newman Tonks. In that year, also, the company exited the automobile parts market, selling off its holdings in that area. Instead, the company turned its attention to wire rope and engineering products manufacturer Bridon, which it bought for £131 million in 1997. Whalley retired the following year--but only after making a failed £1.1 billion bid to take FKI private.

In 1999, FKI began targeting growth in a new area, that of logistics and materials handling equipment and systems--set to boom with the growth of the e-commerce market. The company began making a series of acquisitions, including Industry General Corporation in the United States, and Crisplant Industries, in Denmark, for a total of £220 million. Soon after, FKI bundled those companies together with an existing logistics and handling company, Matthew Conveyor, and created a new division, FKI Logistex. By the end of that year, the company had made another important logistics acquisition, of Pinnacle, based in the United States, for a total cash and debt cost of $425 million.

FKI Logistex, which had cost FKI some £509 million to put into place, quickly proved to be the company's fastest growing segment, a position aided in January 2000 by the purchase of U.S.-based SNE Systems, which produced integrated control systems for materials handling. By the end of that year, the company claimed the number two spot worldwide for materials handling systems, behind Germany's Siemens.

Although observers suggested that FKI, with the success of Logistex, might seek to de-merge the company again at the turn of the century, FKI remained committed to its focused, yet diversified approach, claiming that the cash flow from its hardware and turbogenerator operations enabled it to invest in gaining scale in its logistics wing. The company added to its Logistex operations, specifically materials handling, in 2001 with the purchase of Stearns Airport Equipment Co., based in the United States, and to its logistics side with the purchase of software developer Dator A/S, based in Denmark.

Not all of the company's investment went toward that division, however. In 2001, the company acquired Skoda Electrical Machines, based in the Czech Republic, for £15.2 million, which was added to its turbogenerator division. The following year, FKI acquired Germany's DeWind AG, a manufacturer of wind turbine systems, for EUR 34.5 million.

The downturn in the U.S. economy, which accounted for some 50 percent of the group's sales, exposed FKI to a drop in its market. Burdened by the heavy debt load built up during its latest acquisition drive, and further hit by the declining value of the dollar, FKI was forced to take a pause in its growth. Beeston stepped down in January 2003, replaced by Paul Heiden. By the middle of the year, FKI had been forced to shut down a number of plants, and then to slash its dividend, in order to meet short-term payments on its looming debt. Nonetheless, the company's difficulties were seen as temporary. As it waited for the economy--and business--to pick up again, FKI was able to look back on a strong record of growth, from a simple manufacturer of parking meters to an internationally operating, diversified engineering group.

Principal Subsidiaries: A Kwint Holding BV (The Netherlands; 88%); Acco Chain & Lifting Products (U.S.A.); Allen-Stevens (U.S.A.); Alvey Systems Inc. (U.S.A.); Augier SA (France); Belwith International Limited (U.S.A.); Bridon Hong Kong Limited; Bridon Inc. (U.S.A.); Bridon International Ltd; Bridon New Zealand Limited; Bridon Overseas Holdings Limited; Bridon plc; Bridon Singapore (Pte) Limited; Bridon-American Corporation (U.S.A.); Bristol Babcock Inc. (U.S.A.); Bristol Babcock Limited; Brush Electrical Machines Limited; Brush Transformers Limited; BTS Drahtseile GmbH (Germany); CERTEX Finland Oy; CERTEX France SA; CERTEX Inc. (U.S.A.); CERTEX Lifting and Service GmbH & Co. KG (Germany); CERTEX SpA (Italy); CERTEX Svenska AB (Sweden); CERTEX UK; Chautauqua Hardware Corporation (U.S.A.); CMP Corporation (U.S.A.); Crisplant Inc. (U.S.A.); Crosby Canada (Canada); Dator A/S (Denmark); Energy Technology Group; Faultless Caster (U.S.A.); FKI Engineering Limited; FKI Industrial Drives Limited; FKI Industries Canada Limited; FKI Industries Inc. (U.S.A.); FKI USA Holdings Limited; Froude Consine; Froude-Hofmann Pruftechnik GmbH (Germany); Guangzhou Bridon Ropes and Lifting (China; 60%); Hawker Siddeley Electric Africa (Proprietary) Limited (South Africa); Hawker Siddeley Power Transformers; Hawker Siddeley Switchgear Limited; Industry General Corporation; Keeler Brass Company (U.S.A.); Laurence, Scott & Electromotors Limited; FKI Logistex; Madico Inc. (Canada); Marelli Motori SpA (Italy); Mathews Conveyor; P.T. Bripindo Utama (Indonesia); Parsons Chain Company; Premier Stampings; Real Time Solutions Inc. (U.S.A.); Rhombus Continental Castors Sdn Bhd (Malaysia); Rhombus Rollen GmbH & Co. (Germany); South Wales Transformers; Stearns Airport Equipment Company (U.S.A.); Truth Hardware Corporation (U.S.A.); Weber-Knapp Company (U.S.A.); Welland Forge (Canada); West House Insurance Limited; Whipp & Bourne; Wright Products (U.S.A.).

Principal Divisions: Lifting Products and Services; Logistex; Hardware; Energy Technology.

Principal Competitors: Siemens Dematic; Daifuku Co., Ltd.; Schaefer Holding International GmbH; Columbus McKinnon Corporation; Swisslog; Murata Machinery Ltd.; Dexion Group Ltd.; Vanderlande Industries, B.V.; Jervis B. Webb Co.


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