Wagon to focus on bodywork

ENGINEERING group Wagon today sold its storage division for £60m, leaving it focused on the design, engineering and manufacture of lightweight, hi-tech vehicle body structures.

Since the arrival of chief executive Nick Brayshaw five years ago, the group has expanded from its Warwick base and its close ties with Rover into link-ups with major European carmakers.

Brayshaw said that the £60m would be used to promote organic growth as Wagon's mainly aluminium vehicle body structures become increasingly important in the construction of environmentally-friendly cars.

Although such parts currently form only 5% of a body structure, Brayshaw forecast that the use of aluminium would increase dramatically over the next few years.

Group sales increased by 4% to £510.9m in the year to March but the European vehicle market suffered from difficult economic conditions and pre-tax profits fell to £22.2m from £25m. The total dividend is pegged at 13.5p.

Brayshaw said a series of new projects with customers such as Renault, Volkswagen, Peugeot and Ford should 'generate sustained organic growth over the years ahead' and added that this could be as much as 20%. The group is also expanding into engineering consulting services, mainly in the field of vehicle manufacture.

The shares today slipped 21 /2p to 216p.