Bespak shares surge 56p on 66% increase in profits

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The Independent Online
SHARES IN Bespak, the maker of pharmaceutical and surgical equipment, surged 56p to 518p as the company reported a sharp rise in profits for the year to 30 April, writes John Murray.

The group made pounds 11.5m before tax, a 66 per cent increase on the previous year's pounds 6.9m. Much of the improvement was down to a full year's contribution from Tenax, the US corporation Bespak bought in March 1992.

The jump in its share price restored the group to the rating it enjoyed until March, when it was hit by a profits warning from one of its biggest customers, US Surgical, and bearish sentiment about the healthcare market ahead of US government reforms.

Bob King, Bespak's chairman, said that sales to US Surgical had increased, despite the latter's problems, and that the American company remained the market leader in its sector.

He added that Bespak's increased presence in the US through Tenax gave the company the critical mass to grow strongly there. Almost half Bespak's sales and operating profits now come from the US.

But the rights issue that raised funds for the Tenax acquisition meant that growth in earnings per share did not quite keep pace with profits growth. However, it still rose 29 per cent to 31.9p. The total dividend rises 11 per cent to 10p.

Mr King said that sales of pharmaceutical valves were slow in the first six months because of destocking by big customers. Pharmaceutical sales rose 16 per cent to pounds 30.3m, and overall turnover 59 per cent to pounds 61.8m.