Shares in the company fell 3p to 37p when it announced a pre-tax loss of pounds 16.7m for the six months to July caused by pounds 18.2m of exceptional items relating to a continuing rationalisation programme. Further exceptional items are likely in the second half, the company said.
Spring Ram said continuing weak consumer demand and a fragile housing market would demand "fresh thinking by the board". Costs would have to be lowered further.
More than pounds 13m of the exceptional costs relate to the two Crosby businesses acquired from Norcros, the builders merchants, in June. An additional pounds 3m relates to further cost-cutting at Stag, the furniture business. The plan is to move all subsidiaries into profit by the end of 1996 while at the same time improving export sales, which grew 81 per cent over the past six months.
Despite a difficult market, group sales increased by 12 per cent to pounds 143m, though like-for-like sales excluding acquisitions were down 1.5 per cent. Operating profits also fell from pounds 2.2m to pounds 1.5m. Profits at the kitchen division fell by nearly 6 per cent, due mainly to rising raw material prices.
The bathroom division saw profits flat due to continued problems at the loss-making Spring Bathroom division. The company lost pounds 1.6m in the six- month period, slightly more than last year due to the fierce competition from overseas imports. Costs will be cut in the second half, which will lead to a significant exceptional item in full-year accounts.
The Stag furniture business saw profits fall. The main problem has been the William Lawrence cabinet business, where lower consumer expenditure on high-ticket items has hit sales. Manufacturing will be concentrated in fewer manufacturing plants. The company hopes the cost of re-organisation will be offset by disposal of some freehold properties.
Gearing stands at 22 per cent and the company has pounds 1m cash reserves.