It is becoming increasingly apparent there are  high stakes for UK engineering and industrial companies if Brexit talks fail to smooth trade routes between the UK and the EU.

Businesses including FTSE 250 constituents IMI (IMI), Bodycote (BOY), Spirax-Sarco (SPX) and Vesuvius (VSVS) generate more than a third of their annual revenues from doing business across the Continent, and analysts calculate that the sector average is 26% of annual sales coming    from Europe.

The wider UK engineering and industrials sector provides a wide range of skills, equipment and services to industries as diverse as automotive, construction, electronics, heating, power, mining, steel production and various manufacturing segments.

Share prices across the sector have come under particularly heavy pressure during October’s hefty stock market sell-off.

‘The industrials have taken their share of pain in the recent sell-off,’ points out stockbroker Numis Securities.

Numis flags sector declines of 18% across the UK-quoted automotive space, engineers down 13% and electricals also 13% off. That compares to a wider UK stock market fall of nearer 7% since the correction began early last month.

Investors will have a clearer picture by the end of November with third quarter updates anticipated from most of the wider sector’s larger companies.

Early indications are so far mixed, with updates from Weir (WEIR) and Vesuvius going down well with investors, while refractory kit maker RHI Magnesita (RHIM) slumped 8% on its 5 November announcement. (SF)

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