Analysts cut forecasts at BOC on margin fears: Shares fall at industrial gases and healthcare group

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The Independent Online
SHARES in BOC, the industrial gases and healthcare group, fell 31p to 714p on evidence of margin pressure in the third quarter.

Stockbroking analysts trimmed profits forecasts. Kleinwort Benson, already at the lower end of the range, lopped pounds 10m off this year's forecast to pounds 340m pre-tax and pounds 10m off next year's to pounds 380m pre-tax. BOC made pounds 337.6m pre-tax profit in the year to September 1993.

Operating profits in the nine months to the end of June fell by just under 1 per cent to pounds 323.6m.

Gases profits rose 5 per cent in the nine months and 10 per cent in the third quarter, but strong volume growth in the US, where margins are historically lower, led to a narrowing of margins.

The healthcare division was the main disappointment, with operating profits dropping 42 per cent. The company said the cause was generic competition for Forance anaesthetic following its patent expiry. The new anaesthetic Suprane continued to achieve market penetration, but analysts expressed worries about the cost of bringing it to market.

Vacuum technology and distribution achieved a 61 per cent jump in operating profits to pounds 36.8m, enjoying strong demand, especially from the semiconductor industries in the US and Pacific region.

BOC says it is on target with its restructuring programme. It is aiming to take pounds 8m in costs out of gases and pounds 12m out of healthcare this year. The programme accounted for an pounds 85m exceptional charge.

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