Tricorn Group plc - a niche manufacturer of pipe and tubing assemblies supplying worldwide markets in the Energy, Utilities, Transportation and Aerospace sectors.
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Investment Proposition

Tricorn’s strategy is to grow and acquire engineering based businesses that supply blue chip OEM customers with attractive end markets. Within these engineering businesses to date the focus has been on manipulating pipes (very large to small) where double-digit EBITDA margins can be achieved. To achieve these margins Tricorn’s subsidiaries typically supply niche pipe solutions rather than commoditised ones. The principal markets it currently addresses are Energy (power generation, mining, oil and gas), Transportation (on and off highway applications), Aerospace (civil and military) and Utilities (water and gas markets). Potential acquisitions are selected on the basis that Tricorn’s management expertise can generate the added value to deliver the double digit EBITDA margins within a two-four year period.

The key elements of Tricorn’s approach are:

  • Drive for operational excellence ensuring products and services are globally competitive and that class-leading quality and delivery performance are achieved.
  • Margins improved through the implementation of lean manufacturing, the sourcing of materials to low cost countries and the utilisation of group resources (shared services and expertise).
  • Organic growth is targeted through increasing share within existing customers and developing new customers.
  • Selective acquisitions continue to be monitored and only companies where Tricorn's management expertise can generate sufficient added value will be bought.

In all cases revenues largely will be driven by the growth within the end markets (power generation, mining, oil and gas, on and off highway and aerospace) and the growth of Tricorn’s customers within these markets. For Tricorn itself the main drivers or additional revenue growth will be market share gains through a competitive overall proposition leading to winning more business from existing accounts and/or developing new customers. Tricorn has good customer relationships with a number of blue chip OEMs and as business is generally secured for the lifetime of the engine/application there is a large proportion of recurring revenues.

To maintain or improve margins Tricorn is able to reduce input costs through low cost sourcing of materials and implementation of lean manufacturing techniques (value stream mapping, waste elimination, six sigma deployment) to ensure ongoing improvements in productivity. As demonstrated in FY2010 it maintains close control of overheads.