City File: Lucas faces dividend cut and sell-offs

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The Independent Online
FEARS that Lucas Industries may cut its dividend culminated in a 7p share price fall to 83p on Friday. The company's financial year ended on 30 July and analysts reckon it could have made losses of up to pounds 20m before a pension fund credit of pounds 90m and a likely hefty charge for further reorganisation and redundancies.

If Lucas maintains its final at 4.9p for an unchanged total of 7p, then the shares yield 11.25 per cent. As recently as May they were yielding 7.5 per cent, but since then the UK car scene has worsened and Germany has gone sharply into reverse.

A new finance director, the ex-Ford man John Grant, may see the wisdom of a lower base for dividends but analysts agree that something has to give, including big disposals like Girling brakes or its applied technology companies.

Much will depend on how trading looks by the time Lucas reports its results in mid-October. On Thursday T&N, its fellow auto component maker and high yielder, may shed more light on this point.