Disposals and plant closures hurt APV: Dividend maintained as profits slide 34%

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The Independent Online
APV, the food processing equipment supplier, held its dividend at 5.4p for the fifth successive year, though pre-tax profits fell 34 per cent to pounds 13.4m in 1993.

Disposals and closures resulted in net exceptional costs of pounds 6.6m. Since 1992, APV has closed 10 plants and shed 2,500 jobs.

A decline of pounds 8.3m in operating profits was mainly due to a deteriorating performance by the dry foods division, which supplies bread- making machinery to traditional French boulangers and ice-cream equipment. It turned a profit of pounds 2.8m into losses of pounds 4.4m in 1993, despite restructuring.

Profits also fell from pounds 4.2m to pounds 1.6m in the liquid foods division, which makes dairy and beverage machinery. The company blamed stiff competition and weak demand. Other divisions held their operating profits or reduced losses.

The only area of strong growth in demand in 1993 was Asia, where turnover rose nearly 20 per cent. Total turnover fell 4.4 per cent to pounds 906.0m. The order book is 10 per cent up on a year ago, and 84 per cent ahead in the US.

Sir Peter Cazalet, chairman, said he was more optimistic about the group's prospects than at any time in the past four years.

Clive Strowger, group chief executive, said the company was building stronger relationships with its customers: 'They are responding very quickly with new orders.'

Zafar Khan, an analyst at Societe Generale Strauss Turnbull, said: 'The recession accentuated all the faultlines in APV. It has made a few disposals, but there are still plenty of underperformers.'

Gearing fell from 31 per cent to 7.5 per cent at the end of 1993. Earnings per share were down from 3p to 0.9p. The shares fell 7p to 1211 2 p.