Eurovein woe continues

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The Independent Online
Shares in Eurovein plunged almost 50 per cent after the specialist engineer issued its second profits warning since being launched on the stock market six months ago.

Don Stain, group managing director, is leaving as part of a management shake-up and big restructuring, but the company would still make a loss this year and was unlikely to pay a final dividend.

Sir James McKinnon, the chairman and former director general of gas watchdog Ofgas, said he believed re-organisation should return the group to profitability next year.

Eurovein was floated last November at 141p a share, but the price fell to 86p in February when the company warned that sales and order had fallen short.

Yesterday, the shares fell from 70p to 38p as Sir James revealed continuing problems throughout the group and the prospects of big restructuring costs.

Faulty work on a contract for a German customer meant additional costs to put it right, while costs on installing machines in the Far East have risen.

Mr Stain is leaving with immediate effect, and Graham Ward, a director in the surface treatment division, has also left. He will be replaced by Stuart Cole, finance director.

An operations director from outside the group is being appointed to the UK subsidiary. The surface treatment divisional head office in Rotherham will close and the engineering activity in the German subsidiary will be transfered to the UK, leading to job losses. An operation will remain in Germany to concentrate on sales, spare parts and service.

In the filtration division, which makes gas and liquid filters, one of the product lines has been withdrawn. "This, together with generally disappointing sales levels, will mean a reduction in staff at the French subsidiary,'' Sir James said.

He added that trading in the components division and in the Italian surface treatment subsidiary was satisfactory. "Margins throughout the group were in line with expectations,'' he said.

He said further delays in orders would affect total sales for the year, and restructuring charges would lead to a pre-tax loss for 1995. Last month, the company announced first quarter pre-tax profits of £221,000, on turnover of £8.6m. Eurovein is one of several companies to hit problems soon after flotation.The company was built from the wreckage of the collapsed Tyzack group.