French breakfasts boost Harrisons

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The Independent Online
HARRISONS & Crosfield has taken 14 per cent of the booming French breakfast cereal market. Until recently only one bowl was eaten in France for every 10 in Britain, but the market is growing at 15 per cent a year.

That helped the food and building materials conglomerate increase profits by 19 per cent to pounds 48.4m, although John Maltby, chairman, warned that 'recovery in demand in the first six months had been patchy'.

He said the improvement in profits was largely attributable to a continuing cost-cutting programme. In the food and agriculture division, the acquisition last year of BOCM, and its merger with the existing Pauls business, had resulted in 13 mill closures out of a combined total of 33.

In timber and building, 30 per cent of the workforce has been laid off since the beginning of 1990, reducing staff numbers from 5,300 to 3,700. The American pigments operation has been consolidated on to two sites from its previous six.

Building products benefited from a small upturn in the home market, where operating profits rose 20 per cent. However, poor performances in Ireland and the US, where freak snow storms struck Virginia in March, held the division's profit improvement back to just 4 per cent, at pounds 11.5m.

George Paul, chief executive and from the annual meeting next May Mr Maltby's successor as chairman, said that the merger of BOCM and Pauls had been disappointing. The division's 30 per cent improvement in operating profits to pounds 19m was less than expected.

The devaluation of sterling had resulted in higher raw material costs, which squeezed food margins more than at Harrisons' competitors. As a result an attempted price rise in January failed to stick.

Plantations benefited from increasing yields from the company's relatively young trees, and profits in the division were 46 per cent better at pounds 12.4m. Selling forward at the high prices prevailing at the end of last year boosted profits.

Earnings per share increased 8 per cent to 4p, after an increase in the tax rate to 38 per cent. The interim dividend was maintained at 3.6p. The shares, which have risen 65 per cent since last September, rose 11p to 188p.