Trading & Merchanting |
Distribution & Processing |
Manufacturing
TRADING AND MERCHANTING
Amalgamated Metal Trading ("AMT")
AMT is a ring dealing member on the London Metal Exchange ("LME").
The company had another successful year, with a strong contribution from
principal dealing activities well supported by client commission earnings, and
the company’s overall profit was higher than in 2003. In 2005 AMT will be
expanding its presence in Shanghai to address the growing importance of China in
the global consumption and production of metals and minerals.
AMT Futures
AMT Futures operates a commodities and financial futures brokerage, and an
investment management division. As foreshadowed in last year’s report,
considerable progress has been made in refocusing the business, expanding the
customer base and achieving operating efficiencies. By the end of the year, the
fruits of this strategy were beginning to show through and AMT Futures reported a
profit for the year, with an improved outlook for 2005.
AMC Treasury Services
AMC Treasury Services functions as an in-house bank, with the primary
objective of covering the cost of the services it provides to the Group. It has
once again met this target and made a positive contribution to Group results.
Physical Metal Trading
The Group’s Physical Metal Trading business trades aluminium alloy, tin and
other non-ferrous metals. The operation is centred in London with support
offices in New York, which covers the US market, in particular for the sale of
tin, and in Singapore, which sources metal from the Far East. Significantly
higher metal prices inevitably led to higher funding requirements but demand was
strong and returns were satisfactory across the range of metals traded, in
particular from tin. The overall result was ahead of 2003.
Amalgamet Canada
Amalgamet Canada markets industrial metals and minerals as agent through a
number of important agencies. Its key telecommunications and semi-conductor
markets have remained in prolonged recession. Attention has continued to be
devoted to restoring the company’s earnings through widening its agency base
and advantage was taken of opportunities in the metals markets which resulted in a return to profitability.
BMC (South Africa)
BMC (South Africa) markets a range of metals and minerals from its
Johannesburg office and was again profitable, at a level slightly ahead of last year. On 2 December 2004, BMC (South Africa)
merged with Ceramics and Alloys Specialists, a company in a similar line of business, to form Alloys, Metals and
Ceramics Holdings (Pty) Ltd. AMC has a 50% holding in this combined company. This is a very positive development, in that
it consolidates the Group’s position in an economy that has significant long term growth potential.
DISTRIBUTION AND PROCESSING -
back to top
Wilkinson Steel
Wilkinson Steel operates steel service centres in the Prairies and British
Columbia regions of Western Canada. It has been an exceptional year in the
worldwide steel industry with prices increasing dramatically during the first
half year, driven by rapid economic expansion in China, and holding steady
thereafter. Demand has remained firm in North America and, despite difficulties
in securing supplies, volume gains in both processed and resale materials were
achieved. Higher volumes, higher prices and improving margins as prices rose all
contributed to profits significantly ahead of last year. The higher volumes and
prices also contributed to a substantial rise in working capital requirements
for the business, although the relevant working capital ratios have been kept
well in line with expectations.
Debro Steel
Debro Steel operates a steel service centre in Ontario.
Debro has benefited from the same strong market fundamentals that
have driven the Wilkinson Steel result, while continuing the sales recovery
reported in 2003. This substantial growth in sales has been supported by
improved margins, resulting in a highly satisfactory profit in 2004.
Debro Chemicals
Debro Chemicals distributes fine and specialty chemicals and pharmaceutical
intermediates to a wide range of industries in Canada. This gives Debro a broad
customer and earnings base so that, although a number of the industrial markets
it serves are relatively mature, the result was again satisfactory, albeit below
last year.
William Rowland
William Rowland supplies specialist metals to customers in the manufacturing
sector. Both served customer markets and metal markets in general were
reasonably buoyant in 2004 so that William Rowland was able to improve on last
year’s profit.
Mountstar Metal Corporation
Mountstar operates a range of non-ferrous metal recycling and processing
activities at a number of locations in the UK. Conditions improved in 2004, with
an upswing driven in particular by the recovery in metal prices. This combined
with Mountstar’s growth into new markets led to a substantial improvement in
profitability, and the performance significantly exceeded that achieved in 2003
MANUFACTURING -
back to top
ThaisarcoThaisarco operates a tin smelter in Phuket, Thailand. The demand for tin has
been very strong worldwide, leading to an improvement in the demand for
processing and refining services. An increased volume of tin processed, combined
with an increasing proportion of sales of upgraded products, underpinned a
strong performance by Thaisarco and a profit well in excess of that achieved in 2003.
National Concrete Accessories ("NCA")
NCA manufactures and distributes construction accessories. Its eight branches
serve the concrete forming construction sector across Canada. Construction
activity continued to be strong countrywide and NCA significantly improved on
its satisfactory 2003 result, with profits in the East particularly strong.
Consolidated Alloys
Consolidated Alloys manufactures and markets a range of products based on
non-ferrous metals. The demand for sheet lead and other materials manufactured
for the Australian housing construction market remained strong during 2004,
although a slowdown began towards the end of the year. Consolidated Alloys’
other manufactured items, of which solder is the most significant, and its
merchandised products, made important contributions to the company’s profit,
which showed further gains over last year’s healthy result.
Consolidated Alloys (New Zealand)
Consolidated Alloys (New Zealand) manufactures roofing products, including
sheet lead and aluminium flashing products, as well as solder. The company also
distributes industrial pumping equipment. In an environment of strong economic growth Consolidated Alloys (New Zealand)
achieved further profit growth this year, producing a highly satisfactory return.
Exchanger Industries
Exchanger Industries, located in Calgary, Canada, manufactures heat
exchangers, most of which it supplies to the Canadian oil and natural gas
industries. Activity levels in the oil and gas sector began to show signs of
expansion in late 2003, which continued strongly during 2004. However, the lead
time from the announcement of major oil and gas projects, through to proposals,
bidding and then manufacture and delivery, can be very extended. Consequently,
although Exchanger secured a significant amount of new business in 2004, much of
its production was devoted to projects bid earlier at very tight margins. These
margins left no room to accommodate cost overruns or other production problems,
which became a factor as output and manning were restored to previous levels. It
is believed that these issues are now resolved, and following a small loss in
2004, the healthy order book gives considerably improved prospects for 2005.
Keeling & Walker
Keeling & Walker produces tin oxide, which is primarily used for glazes
by the ceramics industry. In fiercely competitive global markets, Keeling &
Walker and its German subsidiary, Thermox, again achieved a satisfactory profit,
in line with that reported last year.
BKS Surveys
2004 saw a recovery at BKS Surveys, a market leader in aerial survey, mapping
and the supply of digital data information systems. While markets have become
increasingly global and competitive, the company has made progress in addressing
the challenges and difficulties presented, and achieved a small profit in 2004,
a marked improvement over last year.
Brookside Metal Company
Brookside Metal, which produces copper-based alloys, is located at Willenhall
in the West Midlands. The markets for these alloys have become increasingly
competitive in recent years and 2004 was extremely difficult for the industry as
a whole and resulted in the demise of a major domestic competitor. In
consequence, there is some cause for optimism that conditions in 2005 will allow
Brookside to improve on this year’s small operating loss.
Mil-Ver Metal Company
Mil-Ver Metal is based in Coventry where it manufactures aluminium alloys,
primarily for the motor industry. Mil-Ver’s performance in 2004 was undermined by a
number of production problems following the commissioning of new plant. In the
latter months of the year, production levels improved but the disruption
resulted in an operating loss at Mil-Ver, although it did not have a significant
impact on the Group’s results.
| 
