Industrial holding group IWP International plans to spend up to $40 million (£27 million) on a plant in the American mid-west which will manufacture the group's range of personal care products for the US market.
IWP chief executive Mr Joe Moran said the group would need a manufacturing base in the United States, but had not yet taken a decision on whether to buy an existing plant or buy a smaller business which the group could then develop.
IWP currently has the capacity in its Burlington business in Britain to handle sales in the US of up to £15 million. "We think we will reach that capacity next year. After that, we'll need a base in the US," Mr Moran said.
Mr Moran also said IWP would aim to make three or four small bolt-on acquisitions over the next year. IWP added two small operations to its business last year. With the group's interest bill covered eight times by operating profits, finance is not a problem when it comes to acquisitions.
Mr Moran was speaking as IWP reported strong growth in the first half, with sales up 31 per cent to £114 million while pre-tax profits rose over 11 per cent to £10.7 million. Earnings per share were up over 12 per cent to 10.68p while there is a 10 per cent increase in the half-year dividend to 2.42p.
Despite spending £38.5 million sterling on the Constance Carroll cosmetics business in Britain in the first half, interest cover only fell from 9.7 times to eight times. Writing off the goodwill associated with the Constance Carroll acquisition means shareholders' funds fell from £30.4 million to £8.6 million, while net debt more than doubled to £89.7 million.
IWP has two divisions - the higher-margin household and personal care businesses and the lower-margin labels and distribution businesses.
In the personal care products business, which takes in Constance Carroll and Royal Sanders in the Netherlands, sales rose 12.1 per cent to £69.8 million, although a fall in margins meant that operating profits were ahead by 11.6 per cent to £9.6 million. The fall in margins was due to the lower margins in the Constance Carroll business and the Dutch guilder exchange rate against the US dollar and sterling.
In the labels and distribution sector, sales were up almost 50 per cent to £45 million while operating profits rose from £2.1 million to £2.6 million. A fall in margins was largely due to the first-time inclusion of the Polbita distribution business in Poland, whose margins are much lower than the businesses in Ireland and Britain.
