Charter cuts 700 jobs as profits slump

CHARTER, THE engineering group, yesterday said it was shedding more than 700 jobs to help combat the effects of a slowdown in business that cut first-half earnings by more than one-third.

The 37.1 per cent decline in pre-tax profit to pounds 28.1m in the six months to June was more severe than most analysts had forecast, prompting some to downgrade their recommendations on the stock. Charter shares slipped 19p yesterday, or almost 5 per cent, to close at 366p.

SG Securities' analyst Zafar Khan said: "Basically, the numbers are slightly disappointing ... What is disappointing is their uncertainty about the timing of the recovery."

SG chopped its recommendation to underperform from hold, and downgraded its estimate of full-year, pre-tax profits to pounds 60m from pounds 67m.

Charter's chief executive Nigel Smith said that the firm would accelerate a three-year restructuring programme to deliver cost savings.

Charter, which has operations across Europe, North and South America and the Asia-Pacific, said 440 positions would go from its Esab cutting and welding business, including about 250 in Europe. A further 300 jobs would go from its air and gas-handling division, Howden, it said.

The payroll cutbacks, some of which had already been announced, represent about 5 per cent of Charter's total workforce of 13,700 at the end of 1998.

Mr Smith said: "Trading conditions in the first half of the year were difficult but, with the exception of Europe, were in line with our forecast ... On the positive side, we've been gaining market share."

The company said that talks over the disposal of its specialised engineering businesses were making progress with a single potential buyer. Analysts estimated the value of the deal at about pounds 200m and said that a completion was expected in the near future.

Guy Hewett, an analyst at Charterhouse Securities, said: "I think, realistically, that we are looking at a year 2000 recovery."