Arjo warns on profits as demand falls

Arjo Wiggins Appleton yesterday issued its fourth profits warning since last November after second-quarter sales figures showed a continuing slowdown in demand for its paper and packaging products. The company had already warned, at its annual meeting in May, that first-half profits would be lower.

Despite the warning, Arjo's shares closed just 3p lower at 171p, as the market shrugged off what is only the latest in a series of disappointments from the Anglo-French company. The shares, 40 per cent of which are owned by French industrial holding company Saint Louis, stand well below the level at which they came to the market at the beginning of 1990.

Sales for the first six months actually edged higher from pounds 1.78bn to pounds 1.86bn, but analysts focused on a decline in second-quarter turnover from pounds 909.9m to pounds 894.9m as customers kept stock levels in check in anticipation of even lower prices. Forecasts for the full year tumbled from a consensus of about pounds 150m to around pounds 120m.

Profit forecasts had already been slashed from about pounds 200m in April as the extent of the downward swing in the paper cycle became evident. The reduction follows five years of gyrating profits from the company.

Having made profits of pounds 232m in 1991, profits slumped in 1992 and 1993, bouncing in 1994 to pounds 217m and then collapsing again last year to just pounds 72m. The share price, which has underperformed the market by almost a third over the past two years, has been almost as volatile as Arjo's earnings.

In the summer of 1995, pulp was trading at almost $1,000 (pounds 650) a tonne but by the spring figures had fallen as low as $400. The cycle is exacerbated in the upswing by customers expanding stocks ahead of feared price rises and in the downswing by inventories being run down to take advantage of subsequently lower prices.

"We stated at our agm that the results for the first half would be poor and that the outlook for the rest of the year was uncertain," the company said. "In view of the results for the first half, which will be announced in early September, our current expectations for the year as a whole have been reduced."

Although raw material pulp prices have fallen back sharply this year, the company warned it would have to work through its higher priced stock before benefiting from the decline.

Arjo's biggest problem is thought to be its carbon and coated paper operations in Europe, which are operating so badly that the company is more reliant on Appleton, its US operation.

Market report, page 18

Sport
The giant banner displayed by Legia Warsaw supporters last night
football
News
news
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
News
Angelina Jolie with her father Jon Voight
people
PROMOTED VIDEO
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
News
Melissa and Joan Rivers together at an NBC event in May 2014
peopleDaughter Melissa thanks fans for 'outpouring of support'
Life and Style
life
Life and Style
tech
Life and Style
One in six drivers cannot identify a single one of the main components found under the bonnet of an average car
motoringOne in six drivers can't carry out basic under-bonnet checks
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100
Voices
Pupils educated at schools like Eton (pictured) are far more likely to succeed in politics and the judiciary, the report found
voices
Arts and Entertainment
Simon Cowell is less than impressed with the Strictly/X Factor scheduling clash
tvSimon Cowell blasts BBC for breaking 'gentlemen's agreement' in scheduling war
News
peopleWrestling veteran drifting in and out of consciousness
Arts and Entertainment
Shady character: Jon Hamm as sports agent JB Bernstein in Million Dollar Arm
filmReview: Jon Hamm finally finds the right role on the big screen in Million Dollar Arm
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Consultants - Banking & Finance

£20000 - £30000 per annum + OTE £40 - £50K first year: SThree: SThree Group an...

Business Analyst,HR,Halifax,£400-450pd

£400 - £450 per day + competitive: Orgtel: My client, a leading bank, is curre...

Recruitment Consultants - IT - Trainee / Experienced

£20000 - £30000 per annum + OTE £40-50K first year: SThree: The SThree group i...

Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone