Dewhurst – economic franchises

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Dewhurst (LSE:DWHA) owns a number of niche manufacturing and distribution business with many displaying high market shares, strong reputations and long-standing relationships with customers and the agents of clients (e.g. an architect specifying Dewhurst lift components for new high rise building).

The UK and European businesses

Dewhurst UK Manufacturing

What it makes:

  • Pushbuttons, e.g. those in the Shard lifts, the Elizabeth Line, Dubai train station, Network Rail elevators, the tallest building in Hong Kong, Heathrow’s Terminal 5 lifts.
  • Key switches – locks lifts so only those with a key can get at the controls
  • Displays, e.g. electric display boards on London Underground
  • Lanterns – waiting passengers can see which elevator has arrived.
  • Fixtures – the entire panel in lifts with all the electronics behind it
  • Customising design for prestigious interiors of lifts.
  • Destination control – lifts figuring out where a lift is to go.
  • Rail multi-sounder – doors talking to passengers, e.g. “door about to close”.

A large proportion of UK manufactured goods is sent to customers abroad or sold through subsidiaries based in Australia, Hong Kong, Dubai, etc. (so view profit split between different geographies with a pinch of salt because much depends on transfer price from UK manufacturer to say Hong Kong distributor, both owned by Dewhurst)

2018 Report: “Sales declined at Dewhurst UK for the second consecutive year mainly due to overseas markets being less buoyant than had been expected. The UK market was also quite stagnant, with a recurring theme of projects being delayed. We have been extremely active on the product design side. We launched our first wholly new rail product for many years. The Train Despatch Equipment Unit has been developed in conjunction with Network Rail and brings together all the components required by a train despatcher, into one module. For the lift industry we have extended our Profile Plus Landing Station range to include three new widths.” (These directors are justly proud of their engineering!)

2019 Report: “Sales improved as our drive to increase fixture sales gained momentum. The UK market was particularly strong with an increase in demand for infrastructure products, especially within the rail sector. We fulfilled our first order for signalisation of a new range of lifts for London Underground (LUL). We expect further orders over the coming years to support LUL’s program to install lifts in all their surface stations. Overseas we started delivery of fixtures for the first of 180 lifts for the new Riyadh Metro. This is a significant order for Dewhurst UK…We have also added to our Lift Indicator range with a number of new offerings based on glass designs.”

Thames Valley Controls

Lift control and remote monitoring of lifts (e.g. gives operational information online such as reports lift performance).  Also, CCTV, e.g. in Manchester’s Arndale Centre.

This business was sold 30th September 2019 to a specialist in the field which benefits from economies of scale, particularly R&D.

Dewhurst and TVC will continue to work together on projects.

Traffic Management Products

Mostly the manufacture of road bollards that bounce back when run over.  This division was bought over a decade ago and was a perennial disappointment.

However, in 2016 sales grew “significantly”, and in 2017 “slightly”. These bollards are highly customisable regarding style, signs and banding (976 variations available). Far Eastern sales are growing.

In 2018 “business fell slightly… we have taken the decision to move key manufacturing processes in house. Good progress has been made on this project, which has led to some major changes for TMP. We have relocated the business to Birmingham…This should allow us to generate a significant improvement in both the gross and net profit of the business.”

2019: “We had a particularly difficult first half of the year at TMP, when revenues were especially soft. At the same time the team at Wednesbury still had a great deal of work to do at the new factory, ensuring that the plant was running efficiently, refining the manufacturing and assembly processes and establishing new Health & Safety and Quality procedures. There had been a greater turnover of sales staff at TMP than is ideal”

Half year to 31 March 2020: “had a strong first half, continuing the progress made in last year’s second half”

A&A Electrical Distribution – the new UK division

This business was bought June 2018 for £12.25m cash. It has a 55,000 sq ft warehouse in London containing 30,000 lift components, cable and electrical equipment, such as those for escalators. It has stocked Dewhurst’s products for many years alongside those from other manufacturers and can supply anywhere in the UK within the day using its own vehicle fleet.

Leading products include electrical trailing cable, s………………To read more subscribe to my premium newsletter Deep Value Shares – click here

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