Hickson shares hit by trading warning

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The Independent Online
SHARES in Hickson International, the chemicals group, fell 13p to 171p in a rising market yesterday after it warned that trading conditions were worsening in Europe.

The warning came as the company reported a 16 per cent fall in taxable profits to pounds 12m for the half-year to 30 June, on turnover up 14 per cent to almost pounds 199m. Earnings per share declined from 6.2p to 4.8p and the interim dividend has been held at 2.85p.

Sir Gordon Jones, chairman, said: 'I fear that I can still see no real signs of an increase in demand in our major markets . . . recovery in the US has been slower than anticipated and trading conditions in Continental Europe have tended to worsen.'

The gloomy outlook prompted City analysts to slash their full-year forecasts. Martin Evans of Hoare Govett has slashed his pre-tax estimate from pounds 28m to pounds 21m, against pounds 24.4m in 1992.

Hickson's problems partly stemmed from slow progress in turning around its accident-prone fine chemicals business, which has been hit by fires at two plants in the past 12 months. The first occurred at a site in Castleford, Yorkshire, last September, killing five people. Earlier this month its Ringskiddy factory near Cork was damaged by an explosion and is expected to cost about pounds 1m.

Both sites are back in operation, but profits from the division fell from pounds 6.4m to pounds 3.9m. The first accident also cost pounds 250,000 in fines and the business is taking much longer to reach profit targets than initially anticipated.

'With hindsight we were too optimistic that we could overcome the disruption caused by the September fire,' Sir Gordon admitted. In consequence, the division is now expected to take another two years to recover.

Thanks to a strong UK result, however, the group's protection and coatings arm marginally lifted profits to pounds 6.6m, on sales up from pounds 75m to pounds 82m. But negative contributions from acquired businesses led to unchanged profits of pounds 5.9m at the performance products division.

Group interest charges rose from pounds 1m to pounds 3.4m, reflecting a surge in net debts from pounds 10m at the end of last year to pounds 35m - equivalent to 54 per cent of shareholders' funds - at the half-year.