The cut, following a one-fifth drop in the interim payout, pushed the total dividend from 8.35p to 6.5p, which is covered 1.9 times by attributable profits. Although Arjo said its policy was to maintain an average cover of between 2 and 2.5 'over a period of years,' there are fears that it may cut the dividend again this year due to a deepening recession in Europe.
Tim Rothwell, an analyst with Barclays de Zoete Wedd, is forecasting a 1p cut in the 1993 payout to 5.5p. 'Although the results were as expected, the company has still not fully clarified its dividend policy,' he said.
The company, which is 40 per cent controlled by Saint Louis of France, was criticised by UK investors last autumn after a surprise cut in the interim dividend. Many felt that the cut was too severe.
Taxable profits slumped by a third to pounds 161m last year on group turnover up 6 per cent to pounds 2.6bn. Earnings per share fell from 18p to 11.6p.
The fall reflected overcapacity and weak demand in Europe, where the operating profit was almost halved from pounds 141m to pounds 74m. However, North American profits rose from pounds 105m to pounds 117m.
The company warned yesterday that trading conditions have worsened this year and could stay grim until 1994. BZW expects pre-tax profits to fall to pounds 142m this year, rising to pounds 168m in 1994. The shares gained 5p to close at 169p yesterday.