Kwik-Fit profits motor ahead

KWIK-FIT, the Edinburgh-founded motor repair chain, shrugged off general weakness in the consumer-spending environment last year and continued to grow its sales and profits.

The Broxburn-based group's British operations saw underlying profit rise by 34.6 per cent to £41.8 million in the year to December 31, 2006.

Sales over that period were also ahead, growing 4.7 per cent to £403.4m, according to the latest accounts from Kwik-Fit (GB).

Kwik-Fit, which was founded by Edinburgh entrepreneur Sir Tom Farmer, said in its annual report: "Despite generally weak retail conditions in the UK during 2006, the company continued to grow sales."

The group has a network of almost 670 specialist tyre, suspension, battery and brakes-fitting centres across the UK, supplemented by a fleet of almost 200 mobile fitting vehicles. In total, it is thought to employ upwards of 1500 people in Scotland out of its total workforce of around 4200.

According to the group's accounts, lodged at Companies House, staffing costs rose to £93.3m, from £89.2m the year before, when the group had around 300 less workers.

Subsequent to the end of the financial year, Kwik-Fit said it had entered into a sale and leaseback deal on the bulk of its freehold properties in the UK, with the proceeds lent to Speedy 1 Ltd, the group's UK parent company, to help towards reducing group borrowings.

Sir Tom, who originally founded Kwik-Fit in 1971, sold the business to US car giant Ford Motor in June 1999 for around £1.2 billion.

But opting to focus on its core car-manufacturing operations, Ford sold the business to private equity group CVC Capital Partners in 2002, with Sir Tom touted at the time as a possible rebuyer of the firm he grew from a single outlet in Leith into a global operation.

But in June 2005, CVC sold Kwik-Fit for £800m to French buyout group PAI, one of the oldest private equity firms in Europe, with its origins dating back to Paribas Affaires Industrielles, the historical principal investment activity of Paribas, the pan-European merchant bank which merged with BNP in 1999.

Among PAI's other businesses are dairy product group Yoplait, coffee machine maker Saeco and United Biscuits, the maker of McVitie's.

Kwik-Fit said that the cost of managing its exposure to price risk for commodities, such as rubber, had "exceeded any benefit" gained, therefore it planned to "revisit the appropriateness" of its policy.

Looking ahead, the group added: "It is expected that there will be further expansion of new products during 2007, including MOT, air conditioning and servicing."

No-one from the company was available for further comment on the latest set of results.