Brammer (BRAM)

Brammer PLC is a leading supplier of industrial maintenance, repair and overhaul (MRO) products. It is listed in the FTSE Small Cap index, with a market capitalisation of around £300m. Established in 1920, it has a rich heritage of industrial and mechanical knowledge. It has more than 100,000 customers in every manufacturing sector, leveraging its pan-European network and offering technical expertise combined with in-depth, industry specific understanding.

Products and services, include bearings, mechanical power transmission, pneumatics, hydraulics, tools and health and safety equipment. In addition to supplying maintenance and engineering spares, it also offers fully guaranteed repair, reconditioning and custom manufacturing services. Delivered through quality assured workshops, these services provide cost-effective solutions which minimise downtime and extend the life of equipment.

There are over 90 sales and service centres in the UK, offering nationwide coverage, guaranteeing quick and easy access to stock. They also have the capability to deliver the right product, on time, wherever and whenever it is needed ~ including a 24 hour, 365 days a year emergency service. It is this all-encompassing service which makes Brammer an interesting investment case, even in difficult economic times. Like many businesses it is vertically integrating itself into its customers operations.

To try and achieve greater efficiencies, increasing numbers of UK manufacturers are outsourcing their entire MRO procurement and management function. In order to capitalise on this Brammer is setting up what it calls Insite, which is a Brammer outlet on the manufacturers site and creating a captive audience of some of its clients. These clients cover almost every industry sector including Bosch, Coca-Cola Enterprises, Heinz, Kraft Foods, Michelin and Yara to name a few. For some of these customers Brammer operates through Insite in their plant working to minimise downtime, and improve productivity and energy consumption. This helps Brammer become essential to companies, particularly in times of economic pressure when downtime can have serious consequences to cash flows and profits.

It's most profitable geographic sector is the UK, accounting for 28 per cent of its profits, with the manufacturing powerhouse, Germany, making up 24 per cent. The others are: 13 per cent in France, 10 per cent Eastern Europe, 11 per cent in the Benelux countries and 12 per cent in Spain. In August the company reported a 52 per cent rise in half-year pre-tax profit. Overall revenue increased by 19.7 per cent driven by organic growth. In a subsequent trading update the company reported a good start to the second-half of the year, saying they are well positioned for good progress at a time when comparisons from the second-half of last year will be increasingly challenging.

Brammer's experience means it is able to offer additional services to help engineers, purchasing and operations managers achieve better returns on investment. Nobody offers this range of services, or depth of expertise. Brammer is now entrenched in the day-to-day business operations of many large multinational companies; this is enhanced further through the Insite programme. The vertically integrated model is one that has worked for a number of similar businesses. Risks to consider include a slowdown in European manufacturing and the potential break-up of the EuroZone. Therefore, whilst our view does not constitute a personal recommendation and any advice given to individual clients would vary according to their personal circumstances and objectives, we rate Brammer a buy.

Robert Kilner, Stockbroker

Redmayne-Bentley can provide Advisory and Discretionary management, Execution-only share dealing, ISAs, Self Invested Personal Pensions, investments for children, valuations including probate and Inheritance Tax portfolios.

To find out more about any of the services listed above or about our other products and services

Visit:www.redmayne.co.uk

If you would like to find out more about Equity Insight and receive a complimentary copy please visit:
www.redmayne.co.uk/equityinsight/share

Risk Warning:

Investments and income can go down in value. Past performance and forecasts are not reliable indicators of future results and performance. There is an extra risk of losing money when shares are bought in some smaller companies, including penny shares, as there can be a big difference between the buying and selling price. Partners, employees and clients may have a position or engage in transactions in any of the securities mentioned. Redmayne-Bentley has taken every step to ensure the accuracy of the information and statistics in this literature.

Click Here for previous editions of the Share Spotlight