APV shake-up to cost 850 jobs and £25.6m

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The Independent Online
APV, the food equipment maker, says action to cut costs over the next two years will lead to the loss of 850 jobs and incur a £25.6m exceptional charge in the 1994 accounts. It also plans to sell six or seven non-core businesses to raise about £25


The restructuring of APV's European businesses was announced last September, but details have only just been finalised. Towards the end of last year Clive Strowger, chief executive, left and was replaced by Neil French, finance director, as acting chief executive.

The stock market reacted positively to yesterday's announcement and the shares rose 1.5p to 55.5p. The exceptional charge was lower than the £30m stockbroking analysts had expected and the payback is swift.

The company said the plan would boost operating profit £14m in the first year and £20m in a full year when implementation was complete in 1996.

"Margin pressure seems to have stabilised and competition is no worse than it was," Mr French said. The margin on the current order book was the same as it was last June.

When interim results were announced last September, APV blamed margin pressure on aggressive pricing by two main competitors, the German company Gea and the Swedish company Tetra Laval.

The value of orders on continuing businesses was 4 per cent higher at the end of November than a year earlier. At the end of last August orders had stood 18 per cent higher, but the autumn months proved less buoyant last year than in 1993. Mr French saideconomic growth in some parts of the world had not yet translated into growth in orders for capital equipment.

NatWest Securities expects APV to show a pre-tax loss last year of £10.1m after the exceptional charge but before the £6.9m goodwill write-off on expected disposals. This year it forecasts profits will recover to £20m and to £31m in 1996.