Caradon helped by interest fall

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The Independent Online
A SHARP cut in interest charges helped MB-Caradon, the bathroom, heating and cheque printing group, to push up taxable profits 28 per cent to pounds 61m in the first half to 30 June.

Helped by a pounds 150m rights issue last year, interests charges were cut from pounds 11.5m to pounds 2.5m. Trading profits, which exclude the impact of the cash call, improved 7 per cent to pounds 63m, on turnover down pounds 11m to pounds 325m.

Operating profits in building products declined from pounds 29m to pounds 25.4m due to depressed demand for bathrooms and heating products in the UK.

But the company's cheque printing business benefited from a reorganisation, raising its profits contribution from pounds 11.8m to pounds 17m.

Group borrowing at the half-year amounted to pounds 62.4m, equivalent to 12 per cent of net assets, putting MB-Caradon in a strong position to make acquisitions.

However, Peter Jansen, chief executive, remains cautious. He says that potential targets looked too pricey and expects better opportunities to emerge later as the prolonged recession strains its weaker competitors.

Meanwhile, the group is continuing with a heavy capital expenditure programme, up from pounds 19m to pounds 24m. The total workforce fell by 400 to 10,100, with 170 losses in the UK. Further cuts are likely as trading remains difficult.

Earnings per share rose 10 per cent to 7.6p. The interim payout is held at 2.75p.

The market is looking for taxable profits of pounds 125m for the full year against pounds 106.4m last time.

The shares dropped 12p to 224p.