After several years of bleak economic news in Europe, there are tentative signs of improvement in business confidence, retail sales and GDP data, and the eurozone is emerging from a technical recession that has lasted for six consecutive quarters. The re-election of Angela Merkel as the German chancellor has also removed an area of uncertainty, easing concerns about German policy towards the euro.
Nicholas Williams, investment manager at the Baring Europe Select Trust (ISIN: GB0000796242), has a focus on identifying attractive investment companies in continental Europe in smaller and medium-sized companies. He says: "European equity markets have enjoyed a good year, with smaller company indices rising by 35.8 per cent in sterling terms in the past 12 months, as investors adopt a more optimistic approach.
"Our bottom-up focus on European smaller companies implies that our principal concern is the merits of the individual company. In other words, macro-economic elements inform our view, but are not the sole driver of investment decisions. As a result of our bottom-up investment decisions, the trust has a significant exposure to Swiss, Dutch and French companies.
"In this under-analysed area, our aim is to identify those companies that are prospering despite the difficult situation. French company Zodiac Aerospace (ZC: EN Paris) stands out as an example of a world-leading company that has performed well, retrofitting cabins and installing new seats and safety equipment in airplanes as airlines invest in their fleets."
Zodiac Aerospace manufactures and sells aeronautical equipment for airplanes, helicopters and weapons systems manufacturers. The company provides high-technology equipment and systems for essential functions in airplanes and helicopters. Zodiac also manufactures and markets passenger and crew seats for civil aircraft, and cabin systems and equipment.
Sales revenue for Zodiac Aerospace jumped by 13.2 per cent for the fiscal year 2012-13 to €3,895m, the company reported on 17 September 2013. Olivier Zarrouati, chief executive officer, stated: "The year 2012-13 was an excellent one for us. Zodiac Aerospace felt the benefit of increased air traffic, ramp-up of new programmes and market share gains. Our annual results will be published on 20 November and are expected to show strong sales figures with an operating margin that is at least equal to that of the preceding year."
