'Our customers in the paper-making industry continue to face tough trading conditions. Without the acquisitions profits would have been flat,' admitted David Dunn, the finance director who is due to become group managing director in October.
At the same time Bill Goodall, chairman for the past six years, is to step down to make way for Harry Tuley, who took over as group chief executive in April last year. A new finance director is being recruited.
Scandiafelt of Sweden and the Italian Adenax were acquired in January 1992. A pounds 55.6m rights issue a year ago paid for these and other smaller acquisitions and the impact has been positive, with earnings per share up from 13.2p to 13.8p.
The devaluation of sterling in September meant that an adverse currency impact on profits of pounds 1.4m turned into a gain of pounds 500,000 by the end of March. Mr Dunn said that there were signs the pound's decline had helped Scapa against its US competitors in Europe.
Sales in North America were 7 per cent higher in sterling terms at pounds 120.8m but profits were flat at pounds 27.9m. Because of acquisitions profits in Continental Europe jumped from pounds 6.2m to pounds 9.3m and further integration benefits are expected.
In the UK, where Scapa supplies mainly non-paper industry customers, there was a sharp improvement in performance in filter materials and tapes, lifting UK profits by 29 per cent to pounds 12.1m.
Scapa is proposing a 5 per cent increase in its final dividend to lift the full dividend by a similar amount to 5.63p but it is also offering shareholders the alternative of a scrip dividend.
BZW is offering to buy new shares under the scrip issue at the equivalent of 5.924p. Assuming 100 per cent take- up the scrip alternative would save Scapa pounds 11.8m in cash and advance corporation tax, increasing earnings by 1p and reducing gearing by 6 per cent. Scapa shares rose 2p to 225p.Reuse content