Major North East employer British Engines toasts rising revenues despite cost pressures

The Newcastle firm saw profits fall amid foreign exchange volatility and said it remains committed to diversifying revenue streams

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Major regional employer British Engines has toasted rising revenues but said profits fell against a backdrop of foreign exchange volatility and cost pressures.

The Newcastle group, which has eight businesses which design, develop and manufacture products used around the world across a range of sectors, has published accounts for the year ended November 2022, showing a 15% rise in revenues to £129.7m. The 101-year-old group said the rise was mainly driven by a rebound in demand for its cable gland and cleat products and hydraulic motors, with the rebound following a dip in demand during the height of the Covid pandemic in 2020 and 2021.

However, the group – which comprises CMP Products, BEL Valves, BEL Engineering, Rotary Power, Michell Bearings, Stephenson Gobin, Stadium Export Services and Tyne Pressure Testing – saw operating profit fall from £5.38 to £4.4m. The company said the figure was impacted in the last quarter of its financial year, with the political and economic turmoil in the UK resulting in “significant” sterling foreign exchange volatility.

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Directors said that, despite strong revenue growth and strong profitability, the year was not without its challenges. They said: “The group had to respond to unprecedented cost inflation which affected all aspects of the business; most significant were raw material, energy and wage inflation. In addition, material availability issues, exacerbated by ongoing Covid restrictions in China and the war in Ukraine, and a tight labour market, affected the group.”

Looking ahead, it said the group remains committed to diversifying revenue streams by investing in new product development, investing in new machine tools and developing opportunities in new markets and geographical regions.

However, it warned that the ongoing global economic and political uncertainty means it has not budgeted for significant volume growth in 2023, and that cost challenges will continue to have an impact as the group has responded to the cost of living crisis by increasing wages.

During the year the firm also took on 68 more staff – taking its total workforce to 1,184 – as well as a number of apprentices – but said recruiting skilled staff remained a challenge. In September, the group will welcome a new cohort of 31 apprentices, saying they will have the opportunity to learn from industry experts and gain hands-on experience in various engineering disciplines.

The company added that its mission to provide opportunities for the region’s aspiring engineers has led it to sponsor a teacher in the community, with the funding being provided to improve technical education for local schools in disadvantaged areas of the North East.

Alex Lamb, chairman of the British Engines Group, said: “We are delighted to report another year of strong financial performance. Our success is a testament to the dedication and talent of our employees, as well as our unwavering commitment to the North East region.

“One of the key hurdles we face is the increasing competition for skilled professionals, particularly in the engineering sector. The demand for top-tier talent continues to outpace supply, making it crucial that we not only offer competitive salaries, but also provide an environment that fosters growth and development. We firmly believe in investing in the future and our focus on apprenticeships is a testimony to our long-term vision.”