BBA returns to £64m profits

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The Independent Online
BBA, the engineering and motor components group, has returned to the black, reporting profit before tax of £63.9m for the year to the end of December, up from a loss of £14.5m in the previous year.

However, turnover was down slightly to £1.38bn from £1.4bn as the company disposed of some non-core businesses.

The loss last year was on the back of a one-off restructuring charge of £76.8m. This is paying for a redundancy programme involving the loss of 2,000 jobs and the closure of three factories in Europe. The redundancies have reduced payroll costs by £46m, a 10 per cent saving.

As a result of cost cutting, margins have increased from 6.4 per cent of turnover last year to the 9.4 per cent achieved in the second half of this year. The company hopes to increase these to 10 per cent by 1996.

BBA's automotive division had a strong year. It has won significant new contracts from car makers in Germany and the UK.

Roberto Quarta, the group chief executive, said: "These results show we have made significant progress on our restructuring programme. We expect to be able to build on this next year. We will complete our restructuring programme next year and expect to see a big increase in automotive demand."

The £130m disposal programme has turned BBA from a diversified collection of industrial enterprises to a more tightly focused group of specialist businesses. Further disposals are expected during the current year.

The company said it plans to make a number of selective acquisitions to give the company sufficient scale in some of its core businesses.

The cash position is strong with £204m in the bank, up from £105m last year. Earnings per share were 6.4p, up from a loss per share of 9.6p last year.

The company is conserving cash by reducing the dividend to 4.75p, compared with 7.5p last year. However, the dividend is ahead of the 4.5p forecast earlier in the year. Shares closed up 4p at 196p.