Dollar fears push down Yorkshire Chemicals

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CONCERN about the impact of the weak dollar on Yorkshire Chemicals sent its shares down 28p to 290p yesterday, despite interim profits only 3 per cent lower at pounds 5.2m, writes Heather Connon.

More than 90 per cent of Yorkshire's sales are outside the UK. Europe accounted for 35 per cent of turnover in the six months to June while a fifth of sales were in the US. It estimates that the weakness of the dollar, coupled with movements in European currencies, cut pounds 450,000 from profits.

Analysts are concerned that the impact in the second half will be greater as the group has not taken forward cover for its sales. Jeremy Chantry, chemicals analyst at Kleinwort Benson, the house broker, has downgraded his forecast from pounds 11.5m to pounds 10.5m.

Sales rose 8 per cent to pounds 48.4m, but price pressure and currencies meant margins were squeezed. The group has been suffering from a lack of capacity that has forced it to buy in chemicals, but new plant due to be commissioned by the year-end will ease the pressure.

Earnings, boosted by a lower tax charge, were unchanged at 9.41p but the interim dividend was increased from 2.375p to 2.5p.