Arran Isle benefits from US energy boom

Arran Isle, formerly known as Heywood Williams, had to axe 600 jobs and complete a debt-for-equity swap with its banks to survive the recession.

But despite continuing tough construction markets across Britain, America and Europe, the Elland-based company reported increased profits for 2011.

Latest accounts show an operating profit before exceptional items, depreciation and amortisation of £1.8m, up 29 per cent on 2010. Revenues fell one per cent to £178m.

Robert Barr, chief executive, told the Yorkshire Post: “We have made progress on recovery and we are definitely seeing further growth opportunities and we are hellbent on taking on them.”

Arran Isle designs, sources, markets and distributes branded building products.

Nearly half of the company’s sales are in the United States, where it is a leading supplier to manufacturers of factory-built houses and recreational vehicles.

These are in demand thanks to an energy boom in the states of North and South Dakota and the Prairie Provinces of Western Canada.

Mr Barr said: “These places are remote. There is no local lodging. Oil workers might be earning $100,000 a year but they are living in cars.

“They are buying these caravans. Scores of mancamps are being built for workers in those parts of the world because there’s no local accommodation.

“We are supplying one which will be for 10,000 people.”

The boom is being driven by suggestions that the US could become the world’s biggest oil producer by 2017 as new technologies allow for extraction of reserves.

In the US housing market, Mr Barr said he is seeing stabilisation and modest growth, albeit off an extremely low base.

He cited industry figures showing a peak to trough fall of 80 per cent, or 2m new units a year to just 400,000 across the US. Some 1m homes have also been repossessed.

Mr Barr said: “We are projecting somewhere between 5-10 per cent housing market growth this year. Our customers clearly benefit from that.

“Compared to last summer when there were worries about a double dip, consumer confidence in relative terms has picked up.”

In the UK, Arran Isle is a market leader in architectural hardware, such as handles, hinges and locks, and supplies nine out of 10 housebuilders, including York’s Persimmon.

It also supplied door hardware for the competitors’ accommodation in the Olympic Village.

Arran Isle has a small business in the Middle East and provided door handles to Abu Dhabi’s Yas Hotel, the first hotel to be built over a Formula 1 racing circuit.

Arran Isle emerged from the capital restructuring of Heywood Williams in October 2009.

The new company takes its name from the codeword used during the restructuring process.

The rescue deal protected 1,000 jobs and the UK pension fund, but cost the group’s banks £21m which they wrote off in return for a majority shareholding in the new group.

Mr Barr said: “We have reshaped the business and found the pockets of growth. That’s what we work on every day.”

The company has launched 300 new products over the last year in the search for new markets.

It now sells to B&Q and works closely with Screwfix, the direct supplier. It has a design team in the UK and outsources manufacturing to India and China, where it has a team at Ningbo, two hours south of Shanghai.

Since the downturn, which he described as “a level of market decline nobody had ever seen before”, Mr Barr said he has focused on what he can influence, such as new products, new markets and global sourcing.

Looking ahead, he said the group expects a pre-tax profit for 2012. He added: “Our plan is we will see significant growth this year. We are on track to deliver that.”

Asked if the group’s majority owners, Lloyds and National Australia Bank, are preparing the ground for a sale, Mr Barr said: “They are supportive shareholders. There’s no process. We are proactively looking at plans out to the middle of the decade. We have funding in place through to the end of 2013. We are now looking well beyond that.”

Not many UK housebuilders are predicting growth during 2012.

The mood in America is similarly cautious, according to Mr Barr who attended the mammoth International Builders show in the US earlier this year.

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