Far East turmoil prompts fresh BTR profits warning

BTR yesterday issued its third profit warning in two years, plunging shares in the troubled conglomerate to a six-year low. Despite their frustration, Peter Thal Larsen finds shareholders have little choice but to support the chief executive Ian Strachan's attempts to turn the group around.

In a trading statement, BTR said it expected second-half profits to be "more or less in line with the restated first half results". That's in contrast with the upbeat outlook the group gave in September, when Mr Strachan said he expected BTR "to show improvement in the second half of this year over the first half".

The stock market reacted viciously, pushing BTR shares down 25.5p to 182.5p as analysts slashed their profit forecasts for the year to December by as much as 10 per cent. Profits are now expected to come in at about pounds 1.06bn.

BTR shares have lost almost half of their value since Mr Strachan took over as chief executive in January 1996, underperforming the FTSE 100 index by 60 per cent.

Industry experts reacted to the news with an air of resignation. "People are just punch-drunk with BTR," said one observer. "They are totally fed up with it."

BTR blamed the profits disappointment on the economic turmoil in Asia and South America and the renewed strength of sterling. The group, which has pounds 900 million of annual sales in emerging markets and is highly exposed to the automotive industry, has been particularly hit by rising interest rates in Brazil. "Auto sales were down 60 per cent in November," Mr Strachan said.

Meanwhile, BTR said the rise of sterling would also affect full-year figures. The group now estimates that currency movements will wipe pounds 75m off its profits, compared to an earlier estimate of pounds 63m. Mr Strachan said the strong pound was also hurting subsidiaries with substantial exports like Brook-Hansen, its electric motors unit. "Currency hits you both ways - in the export market and in import substitution," said Mr Strachan.

Despite the gloom, few observers felt there was any option but to back the management's attempts to concentrate on its main engineering businesses. "It's difficult to see how you could engineer another major rethink," said an analyst. "The BTR team had better stick to their task."

Since Mr Strachan took over, he has implemented a strategy of slimming BTR down to a core of engineering businesses. The group has largely completed the first phase of the disposal program, selling businesses with annual turnover of pounds 2.3bn, and last month sold its polymeric products division to a management buyout team for pounds 515m. It is currently negotiating the sale of its packaging division, which is expected to raise pounds 3bn, and a clutch of smaller subsidiaries. The group hopes to complete the sales next year. "We've had tremendous interest in all of those businesses," Mr Strachan said.

Mr Strachan said the proceeds would be re-invested in the four core engineering divisions: automotive; control systems; power drives; and specialist engineering. He also said the group would return a "significant proportion" of the cash to shareholders.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?