2,000 jobs to go in LIG revamp: Strategy change results in film processing division being put up for sale

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The Independent Online
TWO THOUSAND jobs are to go at London International, the troubled condoms and film processing group. The job cuts follow a strategic rethink prompted by mounting losses. They will be accompanied by the sale of the loss-making ColourCare film processing division, acquired in the 1980s.

The 3,500 employees working in photo-processing will be sold with the business if a buyer can be found, but almost a third of the 7,000 staff working in its core condoms and surgical gloves business are to be made redundant. Details of where the axe will fall have yet to be revealed. In all, about 2,000 staff are employed in the UK, about 1,000 in the US and 3,500 in Malaysia.

Nick Hodges, the group's chief executive, said the company had invested heavily in a new, low cost plant in the Far East. This would be used to reduce dependency on less productive plants elsewhere.

LIG is pinning hopes on its traditional high-technology condoms and surgical gloves business. While it believes the surge in condom sales as a result of the spread of Aids has now reached a plateau it thinks there will be continued worldwide growth in condom sales of 2 to 3 per cent a year.

Nevertheless, analysts said that the poor performance of health care was one of the more disappointing aspects of the interim results, which were released yesterday.

The group lost more than pounds 5.1m in the six months ended September, compared with pre-tax profits of pounds 15.5m in the same period the previous year. The losses follow a profit warning and management shake-up in September. The interim dividend was passed and the shares dropped 28p to close at 111p.

Photo-processing lost pounds 3.1m ( pounds 6.3m profit) at the operating level while health, which was also partly affected by the recession, especially in Italy, saw profits fall to pounds 3.5m ( pounds 16.1m). Photo turnover was pounds 72.9m ( pounds 73.9m) and health turnover was pounds 124m ( pounds 120.9m).

The balance sheet weakened, with a net cash outflow of pounds 24.9m in the first six months of the year. Borrowings stand at pounds 153.9m ( pounds 134.1m). LIG is hoping to fund the 'very substantial charge to profits' that will flow from its restructuring through the sale of the photo-processing business and 'selected non- core brands' and borrowings.

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