British Gas squeeze hits profits at Victaulic

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The Independent Online
VICTAULIC's profits have dropped for the first time since flotation six years ago after it fell victim to reduced capital expenditure by British Gas, whose pipeline network is under investigation by the Monopolies and Mergers Commission.

The reduced pre-tax profits for 1992, down by 5.4 per cent to pounds 13.5m, came as no surprise to the City after Victaulic could only hold interim profits at pounds 6.9m.

Yesterday David Stewart, managing director, said full-year profits were damaged by the decline in turnover, down pounds 13.8m at pounds 101.2m.

Money sales to British Gas in 1992 were down by 20 per cent, he said, although it was still using Victaulic for renewal and repair work. 'As well as the MMC referral there has been a squeeze on British Gas's profits by the reduction in domestic gas prices, so it is cutting costs wherever it can.'

Mr Stewart said Victaulic did not expect increased demand from British Gas in 1993.

Turnover was marginally up on the water side, which contributes about 40 per cent of group sales.

In November, Victaulic paid pounds 4.8m in cash for Lindapter, a steelwork fixing specialist. It ended the year with net cash of pounds 6.2m.

The total dividend has been raised from 7.35p to 7.8p, and is covered 2.6 times. Yesterday the shares slipped 3p to 347p.

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