Cookson cuts debt and leaps 60% to pounds 95m: Industrial materials supplier delivers after three-year plan

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The Independent Online
COOKSON, the industrial materials supplier, completed its rehabilitation yesterday with a 60 per cent profits leap. The results were the culmination of a three-year programme to reduce debt and refocus operational activities.

Profits, turnover and earnings per share all advanced impressively. Pre-tax profits were pounds 95m for the year to 31 December, compared with pounds 60m. Turnover was pounds 1.43bn up from pounds 1.24bn and earnings per share - despite the cash calls - rose 50 per cent to 12.1p.

After an ambitious acquisition spree in the late 1980s debt rose to pounds 600m. This, with the onset of fierce recession in Cookson's industrial marketplace, caused some observers to question the company's chances of survival.

However, Cookson has reduced borrowing by combining asset sales with two rights issues that raised pounds 270m.

Under guidance from Richard Oster, chief executive, debt fell to pounds 180m by the end of 1993. Gearing reported yesterday was 28 per cent, down from 76 per cent.

The figures were flattered by advantageous movements in exchange rates and a restatement of 1992 figures to allow for changed accounting policies. However, without the distortions, underlying profits still improved by 30 per cent.

Robert Malpas, chairman, said: 'We have reached a level where we can say we have achieved a respectable performance. We now want to move on to a superior performance.'

The operating profit margin across Cookson's five divisions improved from 6.7 to 7.7 per cent. In the second half of 1993 the return on sales rose to 8.4 per cent.

Mr Oster said he wanted to improve margins by more than 10 per cent. This goal, he said, would be reached by increasing turnover to maximise production efficiencies and by keeping a tight control of costs.

Mr Oster also said margins would benefit as the mix of Cookson's product range was improved. Small bolt-on acquisitions and making full use of technological advances will help this process. He added that better-quality products would lead to better profits.

Shares in Cookson dived from a high of 353p in August 1989 to a low of 50p a year later. However, the price has recovered steadily since 1990 and closed up 13p at 266p.

The final dividend for 1993 was increased to 3.3p from 3p, making a total for the year of 6.3p (6p).

Martin Bomford, an analyst at Barclays de Zoete Wedd, said: 'Cookson has delivered on everything it said it would.'