Hepworth hit by devaluation: Profits down 36% as demand falls

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The Independent Online
DEVALUATION probably cost Hepworth money, according to John Carter, its chief executive, despite the fact that more than half of its business is overseas.

The group yesterday reported a 36 per cent fall in pre-tax profits to pounds 44.8m in 1992, on turnover down 5 per cent at pounds 627.5m, largely due to sharp downturn in demand in the UK and pounds 9.2m of redundancy and rationalisation costs. Earnings fell to 15.6p a share but the dividend was held at 14.85p via a 9.35p final.

Devaluation has helped its refractories business, which supplies bricks to the glass, steel and brick industries in 60 countries, where its main competitors are German, French and Austrian. But Saunier Duval, its French boiler business, makes half its sales to countries that have not devalued their currencies.

Despite the currency impact, profits from Saunier Duval rose from pounds 22.9m to pounds 26.2m. Mr Carter said demand in France fell 1 per cent last year. But he said the impact of a downturn in Europe should not be too severe because the group's main market is for replacement boilers.

Profits in Britain fell 29 per cent to pounds 37.8m, largely due to the refractories business, where profits slumped from pounds 18.2m to pounds 7.6m, but home products and building products also fell.

Borrowings fell from pounds 157.4m to pounds 129.7m, including pounds 99.9m of convertible bonds as debt, but are still more than 1.3 times net assets.

Mr Carter said that he was confident that the bonds would convert into shares - the company can enforce conversion from 1995 at 286p a share. He ruled out a rights issue unless it was linked to an acquisition. The shares closed down 2p at 320p.

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