BOC maintains interim as recovery gathers pace

SHARES in BOC rose 29p to 715p as better-than-expected half-way results and bullish comments about trading led analysts to upgrade profit forecasts for the gases and healthcare group, writes Russell Hotten.

Even before the benefits of BOC's restructuring programme feed through, Pat Dyer, chief executive, said economic recovery in some main markets was gathering pace and sales were growing.

BOC made taxable profits of pounds 79.7m ( pounds 182m) in the six months to 31 March, with provisions of pounds 85m for restructuring and pounds 8.7m for losses on disposals. The pounds 173.4m total compared with analyst's expectations of about pounds 160m. Turnover was pounds 1.7bn ( pounds 1.6bn).

BOC is expected to raise prices in the US, which should raise margins. On Monday, Praxair, a rival industrial gases business, said it had seen increased demand and was raising prices by 3 to 7 per cent.

BOC's performance led to renewed forecasts from analysts, with Kleinwort Benson raising full-year profit estimates by pounds 10m to pounds 350m and by pounds 20m to pounds 390m for next year. Kleinwort's Jeremy Chantry said: 'The general tenor was far more upbeat than anyone expected.'

A pounds 13m rise in operating profits at BOC's vacuum and distribution business was a good result, Mr Dyer said. Profits also improved in the three medical products divisions. Only pharmaceutical profits were down, because the Forane drug patent expired in the US. BOC's new drug Suprane gained market share, but could not offset lower revenues from Forane.

Operating profits in the gases business of pounds 161m ( pounds 156m) were due to improvements in big markets.

BOC is in the first year of a three-year restructuring, which Mr Dyer said would save pounds 60m a year. The dividend is an unchanged 11.6p.