BOC forecasts reined back after warning

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The Independent Online
A veiled profits warning from BOC yesterday sent shares in the gases and healthcare group tumbling 40p, or 4 per cent, to 855p. The company's warning of problems in its vacuum products and healthcare businesses had analysts reaching for their red pens and reining back forecasts by almost 10 per cent.

The company said some semiconductor manufacturers, who are big customers of BOC's Edwards Vacuum Products subsidiary, were reappraising expansion plans. But BOC confirmed its faith in the long-term prospects for the industry.

Analysts took a less sanguine view: "What BOC has delivered at today's meeting is effectively a profits warning", one said. Consensus forecasts for the year to September fell from about pounds 450m to between pounds 438m and pounds 440m. For the year to September 1997 forecasts of pounds 505m were replaced by a range of pounds 460m to pounds 470m.

The company also flagged problems at its Ohmeda health-care business which makes the Forane anaesthetic, and saw profits fall 27 per cent in the third quarter to June. For the nine-month period to that date, profits were 15 per cent lower.

Danny Rosenkrantz, the chief executive, who took over from Pat Rich at the beginning of the year, said third-quarter price competition in the anaesthetic product market "was very acute", affecting profitability for its Forane product. Prices fell faster than the group anticipated, he said, and "are set to deteriorate further" in the fourth quarter.

The news took the edge off group profits for the nine months, which managed an 11 per cent rise to pounds 327.3m on an 8 per cent increase in turnover to pounds 2.99bn. Higher profits were driven by an 11 per cent rise in the core gases business as margins improved in most regions.

BOC is building a 1,290-tonnes-a-day oxygen and nitrogen plant in India which it hopes will give it a toehold in the east of the sub-continent. The company has also made its first move into the Russian industrial gases market with a conditional agreement to acquire a controlling interest in Volgograd Oxygen, one of Russia's top three industrial gases companies.

Despite the warning on future prospects, vacuum products actually had a strong third quarter with profits 35 per cent higher, or 37 per cent up in the year so far.

BOC said it was considering listing its shares on the New York Stock Exchange through an ADR programme. Trading could start in late September.

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