Lift in economy encourages Scott to eye more expansion

Published on Sunday 1 November 2009 19:18

SCOTT Group, the pallet maker and industrial components specialist, is back on the acquisition trail and eyeing "bolt-on" businesses worth as much as £10 million.

The new-found appetite for deals should help push the group closer to its medium-term target of achieving 150 million in annual sales.

Fife-based Scott Group's last major acquisition of a rival business was in 2007, when it snapped up the Airdrie-headquartered Marlaw. That deal is understood to have given a 30m boost to sales.

In September of this year, the firm revealed that combined revenues from Scott and the Marlaw group of companies had pushed through the 100m mark.

Chief executive and co-owner John Scott told The Scotsman that since then confidence had been returning to the market, prompting the company to resurrect its expansion plans.

"It's fair to say our acquisition strategy stalled as the economy weakened," Scott admitted. "We held back to see if things were levelling out and we are now seeing some signs of a pickup in the building sector.

"We are confident enough to say that our acquisition strategy is back on the table and we are actively looking now at businesses to acquire across all of our divisions, though focusing mainly on the pallet side."

He said the businesses being looked at had turnovers ranging between about 1m-10m.

Scott also pointed to a 20-year track record of funding support from HBOS/Lloyds, stressing that this was set to continue.

"We have two decades of delivering with them," he added.

The group's headcount has fallen as a result of "a fair chunk of consolidation", accelerated by the recession.

"We shut down some sites and consolidated into nearby ones," noted Scott. "That always had to happen but was brought on a lot quicker with the downturn."

Across the group – which also includes the Fasco industrial equipment business acquired in 2007 – the headcount stands at about 1,000. A year ago, staff numbers were closer to 1,150.

Scott said sales in recent weeks had been "better than they had been for most of the year".

The firm is also eyeing further expansion on mainland Europe, where it has an operation in Latvia to secure timber supply.

"Our intention is to set up manufacturing bases on the Continent where there is huge potential," said Scott.

"We are serving the same customers over there and they are keen for us to do it. We are looking to develop plans during the course of next year and see it as quite a significant growth area."

The firm started out with just four employees and a turnover of 96,000 two decades ago.

Its takeover of Marlaw two years ago marked the 27th deal since the group's owners – brothers John and Norman Scott – embarked on a UK-wide expansion drive. It is now the UK's largest importer of pallet material.