FII warns of substantial slide in first-half earnings

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The Independent Online
FII GROUP, the shoes and medical equipment company, yesterday warned that its pre-tax profit for the first half of this financial year would be substantially lower than the pounds 3.48m interim pre-tax profit it made in 1992, writes Rupert Bruce.

The company has recalled a piece of blood-testing equipment it manufactures after rigorous use by one of its customers revealed a fault. It has also lost a research and development contract it had been working on for two years, after missing a deadline.

Monty Sumray, chairman, said the blood-testing equipment was selling successfully but he had decided it needed modification after a customer reported a fault. He said the loss of the research and development contract was a 'costly business' and would be responsible for a good deal of the pounds 1m he expected the scientific and technical division to lose in the first half.

But action that FII had taken in its core shoe division - which makes the range of Lotus formal shoes - to improve margins was working. The board expects an improvement in trading in the second half.

Mr Sumray said management had increased production and sales of shoes last year to improve its margins after the cost of raw materials from abroad had climbed following Black Wednesday. The shoe factories were operating at full capacity and were planning some production increases.

FII is now considering only undertaking research and development for its own products and not for third parties. It is also taking action to reduce costs in the scientific and technical division.

The shares fell 61p to 280p.