Filter firm clears the way for bigger payout
WHEN Ben Stocks became chief executive of Porvair in 1998, the company generated almost all of its revenue from waterproof plastic. Over the next few years, everything changed.
A strategist by nature, Stocks reckoned Porvair needed to pivot out of plastics and into an area where it could become a genuine specialist, making goods that other firms had overlooked, but that were essential for daily life.
Out went plastic and in came filters. The company already had a small filtration division, but today it is a leading producer of filters used in a range of industries around the world, from aerospace to healthcare to water processing.
About 40million filters are made every month for PCR tests worldwide, ensuring laboratories can eliminate external elements. Porvair also works with laboratories that analyse water to make sure it is clean and pharmaceutical products to ensure they are safe.
The company specialises in molten metal filtration too, producing about 500,000 filters a year to ensure aluminium is pure before it is moulded into components for iPhones, electric vehicles or industrial machinery.
Even fizzy drink cans rely on Porvair kit, without which they might leak or explode.
Filters range in size from minuscule objects for scientific research to giant structures, three storeys high and 25ft wide, used to convert biomass to energy.
Filters are a critical part of hundreds of industrial and commercial processes and they are a fractional cost of a firm’s overall expenditure. As a result, customers tend to stick with Porvair because it provides an essential piece of kit. And they are less likely to make a fuss if prices rise slightly because filters are comparatively cheap compared with other bits of equipment.
Porvair operates in the UK, the Continent and China, but its largest market is America, which accounts for half of group sales and seven of the firm’s 15 manufacturing plants. US business has been brisk of late, as firms have begun to bring manufacturing home, swapping Asian suppliers for local players.
And Porvair is considered local. The group is headquartered in King’s Lynn, but Stocks has adopted a decentralised model, so while he and the finance director are based in the Norfolk head office, almost all of the remaining 1,000 or so employees work on location.
Stocks’ focus on filters has delivered consistent, long-term results, generating average annual sales growth of 8 per cent to 9 per cent and profit growth of about 10 per cent annually over the past 15 years. This year should follow the same reassuring pattern.
Porvair delivered record interim results for the six months to the end of May and brokers forecast a near 10 per cent increase in sales to £160million with profits up just over 10 per cent to £16.3 million for the year to the end of November.
Stocks is a committed dividend payer too so the annual payout is expected to rise from 5.3p to 5.6p, with further increases pencilled in for 2023 and 2024.