City unmoved as APV goes into red

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The Independent Online
Radical restructuring proposals at APV, the food machinery group, have plunged it into a loss of £18.2m for 1994.

But the market had been braced for the news after a statement in January and the shares gained 1p to 63p.

Exceptional charges of £32.5m were in line with APV's forecast and included the £25.6m cost of a profit improvement programme, which envisages 850 redundancies and the sale of seven non-core businesses.

"The continuing focus on concentrating the business and improving the efficiency of the organisation will lead to a real improvement in the group's financial performance," Sir Peter Cazalet, chairman, said.

The company added that the staged implementation of the programme this year and next would lead to a gain in operating profits of £14m this year and roughly £20m in 1996.

Last year's loss compared with a pre-tax profit of £16.3m in 1993. Operating profits from continuing operations climbed from £17.2m to £20.6m, but there was a collapse in the core sales and engineering division, where profits slumped to £1.7m from £12m after a "substantial" loss in Brazil.

Other areas performed better. The components manufacturing and distribution arm raised profits from £12.2m to £16m, while the specialist engineering and manufacturing businesses bounced back from losses of £2.7m to profits of £5.7m.

The company said orders in hand at the continuing businesses were around 10 per cent ahead in the first two months of the year.

As forewarned, the final dividend is halved to 1.7p, cutting the total to 2.7p from 5.4p, payable from earnings per share down 29 per cent to 3p.

Sandy Morris, analyst at NatWest Markets, is now looking for profits before exceptional items of £24.5m this year, up from £15.2m in 1994.