Operating profits slumped 9 per cent in 1992, but an interest credit and a jump in profits from a US associate helped pre-tax profits to move 9 per cent ahead of 1991 to pounds 55.16m. The performance disappointed the market. The shares fell 18p to 235p and stockbrokers cut back profit expectations for the current year.
There was also some annoyance among followers of the company that it had not found a use for pounds 73m of cash it raised in a rights issue 12 months ago. 'Anyone can earn interest on money in the bank,' one analyst said.
The company has a series of joint ventures that count as associates, and last year's pounds 5.6m contribution was up from pounds 1.6m in 1991. Much of the improvement was due to a profits turnaround at Spartech, the US firm in which Vita has a 24 per cent stake. Spartech added pounds 2.3m last year, but lost pounds 900,000 the year before.
Profits fell in each of Vita's operating divisions and in each geographical area. Bob McGee, the chairman, said: 'In the UK, despite official outpourings, there are only a few signs that the end of the recession is, in reality, any nearer.'
Conditions in Continental Europe, which accounts for two thirds of turnover, were deteriorating, he said. The company is currently making tentative moves in Poland and Hungary to build on its positions in France and Germany.
Earnings per share stuck at 16.3p, reflecting the balance between better profits and a greater number of shares in issue following the rights issue.
The rights cash was intended to fund a string of small fill-in acquisitions. Mr McGee said two or three opportunities that Vita was eyeing when it held the rights issue had fallen through, but the intention to use the cash for acquisitions remained the same.
The shares, which had gained a reputation for solid growth, are now below levels of a year ago. Since the capital-raising last March, Vita shares have underperformed the stock market average, falling 13 per cent in relative terms. Vita's operating profits were pounds 48.7m for the 12 months to 31 December compared with pounds 53.4m. A net interest credit of pounds 842,000 - compared with a pounds 4.6m charge last time - and the profits from associate companies helped Vita to raise pre-tax profits from pounds 50.4m.
Despite the tough trading conditions, Vita raised its dividend 5 per cent to make a total of 7.15p for the year.
Analysts at Natwest Markets, who were predicting taxable profits of pounds 55m this year, reduced their forecast to nearer pounds 52m after yesterday's figures. Earnings per share may fall to 14.3p.Reuse content