Glynwed pipes up 25% rise in profit

RUSSELL HOTTEN

Glynwed, the Aga cookers to pipes business, suprised the city with a 25.5 per cent profits rise despite worries about the slowdown in the UK's rate of economic recovery.

Analysts edged up their forecasts for this year as the company reported profits of pounds 84.2m and trading improvements in most key operations. Zafar Khan at Societe Generale Strauss Turnbull raised his forecast for this year by pounds 4m to pounds 102m.

About 66 per cent of Glynwed's market is in the UK, but the company said that continued growth in exports, up 35 per cent last year, would cushion it until the expected economic upturn at the end of 1996.

Bruce Ralph, Glynwed's chief executive, said the pipe business had benefited from higher spending by the water companies. The metals businesses were also doing well, with volumes running at the same level as last year, despite fears of a slowdown in industrial output. "Overall, group order intake is running at the same level as the last quarter of 1995," he said.

The group would be looking to make some non-core disposals in the construction materials division, while further bolt-on deals were also possible.

Metals reported record profits of pounds 16.8m (pounds 11.3m), while plastics' profits rose from pounds 19.9m to pounds 26.3m thanks to acquisitions. A good start to the year in the consumer products division, which makes cookers, could not be sustained because of high raw material prices and profits slipped from pounds 14m to pounds 12.1m.

Disposals had helped minimise the company's exposure to the UK economic cycle. The pounds 147.3m acquisition of Victaulic last August would also have a significant impact on reducing cyclical swings. The Victaulic purchase helped raise gearing to 40.9 per cent at end-December, but Mr Ralph said he was comfortable with the debt level and expected this to fall to around 25 per cent by the end of 1996.

Victaulic's integration into Glynwed was progressing well. It had strengthened the company's position as a world leader in water, gas, and related pipework systems.

The results include a four-month contribution from Victaulic, which made an operating profit of pounds 4.6m, before reorganisation costs of pounds 1m. Group operating profits rose 25 per cent to pounds 93m. The final dividend is 8.35p, lifting the total payout from 12.25p to 12.75p.

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