Gestetner bounces back in second half

A SHARP recovery in second-half profits helped Gestetner Holdings, the photocopier and camera equipment supplier, to raise pre- tax profits by a fifth for the full year to 31 October.

The taxable result is up from pounds 22.4m to pounds 27.2m on virtually unchanged turnover of pounds 900m.

At the interim stage the company had shown a two-thirds decline in profits, but an improving US economy and cost-cutting reversed the slide.

Fully diluted earnings per share improved from 11.6p to 12.1p. The final dividend of 6.4p maintains the year's payout at 8.2p.

Basil Sellers, the Australian chairman and chief executive, said second-half earnings were more than double those of the first, thanks to reduced costs. The company, which is 25 per cent owned by Ricoh, the Japanese photocopier giant, slashed its workforce by 1,000 to about 9,000 last year and is likely to be trim it further in 1993.

In addition, group performance was boosted by a steadily recovering US economy, which Gestetner believes has firmly pulled out of recession.

Operating profits from the US photocopier business rose from pounds 0.7m to pounds 1.7m while photographic equipment lifted its contribution from pounds 2.2m to pounds 3.4m.

In the UK, however, the recession meant trading profits from photocopiers dropped from pounds 4.7m to pounds 3.2m. The camera side slipped from a pounds 0.5m profit to a pounds 2.1m loss.

France, the single biggest contributor to the group, boosted profits from pounds 5.7m to pounds 7.5m in photocopiers, though the camera division's profits fell to pounds 0.4m ( pounds 0.6m).

The company is expecting a tougher year in Europe, with several key markets having moved into recession.

Asian and African markets showed strong growth. Total photocopier profits were up from pounds 6.3m to pounds 7.2m. The cameras arm broke even.

The group's interest charges dropped from pounds 14.1m to pounds 11.3m despite a jump in net debt from pounds 64.4m to pounds 94.7m. The company said the increase in borrowings was due to weaker sterling.

However, after paying for interest and dividend costs, the group generated net cash inflow of pounds 38m last year, up by pounds 12m.

City brokers are forecasting taxable profits of about pounds 36m for the current year.

The shares rose 2p to 152p yesterday. They have attracted interest recently on rumours of a takeover bid, with Ricoh and Inchcape, the trading group, mentioned as possible predators. Gestetner refused to comment on the speculation.