Acatos issues profit warning

Acatos & Hutcheson, the edible oils group, has warned that a combination of aggressive pricing and rising raw material costs will mean lower profits this year.

In a statement to shareholders at the company's annual meeting yesterday, Ian Hutcheson, chairman, said: "Whilst British sales volumes have been maintained, and export business is growing satisfactorily, the interim results will be below last year."

The company made £5.6m in the six months to April last year and advanced to £14.2m in the full year to September.

Stiff price competition means the company cannot pass on increases in raw material and packaging costs to customers. Supermarkets selling under their own brand are the company's main customers.

At the same time, the group has incurred additional costs connected with the integration of recent acquisitions and restructuring of its manufacturing operations.

Two edible oil and fats businesses, CWS Irlam and Cordner Edible Oils, acquired during the year, had proved more costly than expected. In the case of CWS Irlam, this was caused by inherited price commitments. The factory at Irlam has closed, with production transferred within the group.

The company is planning to write off the costs of constructing two new factories at London's Docklands and Erith in Kent through this year's profit and loss account.

Mr Hutcheson said the company expects to maintain its current level of dividend, which was 3.5p at the interim stage last year, over the restructuring period.

Acatos expects to return to increased profitability in 1996, and wants to be the lowest-cost producer of edible oils by then.