Hepworth holds ground amid building sector gloom

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HEPWORTH has warned of continuing gloom in the UK building materials sector despite posting respectable pre-tax profits of pounds 32.8m for the first half.

The result represented a drop of 7 per cent over the same period last year on turnover that fell just 3 per cent to pounds 319.1m.

Profits have been maintained by continuing strong demand in continental Europe, which accounts for about 40 per cent of Hepworth's business.

But Hepworth has embarked on an extensive cost-cutting programme in its UK operations, involving 400 job losses in the building products division and redundancies on a similar scale in the refractories business.

The group is expected by analysts to take a charge of about pounds 8m above the line in the second half, although Bob Lambourne, finance director, says there will be no extraordinary write-offs.

Accordingly, Amarjit Chhina, analyst at BZW Securities, has marked down his forecast for the full year from pounds 65 to pounds 55m, against pounds 70.4m in 1991. He said: 'Hepworth has given up trying to second-guess when the recession is going to end and has attacked the cost base very well.

'Despite its continuing exposure to the UK market, overseas business is still growing and the balance sheet is strong. I am a buyer, because this is one of the highest quality companies in the sector.'

Earnings per share were 11.3p (12.2p) and the interim dividend was held at 5.5p. Mr Lambourne said the final dividend was 'not under threat'.

The shares rose 12p to 318p on the results but fell back to 310p at close.