Closures trigger Courtaulds dive

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The Independent Online
COURTAULDS, the chemicals and fibres group, yesterday surprised the City with a plan to shut down six manufacturing plants with a loss of 650 jobs in Europe.

The cuts were announced as Courtaulds reported taxable profits of pounds 96m, up from pounds 88m, for the half year to 30 September. Earnings rose from 18.1p to 19.5p and the dividend has been improved from 3.8p to 4p.

However, the results were below expectations and news of the closures and a dismal trading outlook led analysts to downgrade full-year profit estimates. Martin Evans of Hoare Govett slashed his taxable forecast by pounds 30m to pounds 150m before exceptional items. The shares dived 44p to 432p.

Courtaulds said the closures would cost about pounds 52m this year and were prompted by difficult trading conditions and falling exports to the Far East, which was becoming increasingly self-sufficient.

As a result it was accelerating its plant closures in Europe and would also integrate the aerospace sealants business with its coatings arm. The changes will reduce the number of coatings factories by a third to 12. Most of the job losses will be in Continental Europe although about 100 could be lost in Britain.

The group is expanding in other sectors. It is building a second factory to produce Tencel, a synthetic fibre, at a cost of pounds 90m, to meet growing demand in the US and Japan. The plant will more than double production capacity. Separately, it is also setting up four plants in the Far East.

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