A pounds 2m drop in US profits is the largest of the setbacks that will reduce Hogg's pre-tax profits for last year to pounds 6m, less than half the pounds 13.4m reported in 1992. Hogg will pay a final dividend of only 2.5p a share, trimming the total payout by 31 per cent to 5.65p (8.15p).
Shares closed 22p lower at 130p after a 15p fall on Tuesday. The shares stood at 211p before the botched release of interim results in September.
Roman Cizdyn, an analyst at Smith New Court, said the news was disappointing. 'I'm afraid to say that when these insurance brokers do this kind of thing, they immediately have a credibility problem. We've seen it with PWS and Steel Burrill Jones. And a dividend cut is anathema.'
Hogg Robinson Inc, the group's US arm, recruited about 30 senior brokers who, in the final months of the year, were unable to bring in enough revenue to cover the cost of hiring them.
Anthony Howland Jackson, Hogg's chairman, rejected the suggestion that this was a misjudgement by Gary Griffith, chief executive of HRI. The senior broking managers were taken on as part of a reorganisation intended to turn HRI into a national broking house. 'Our US broking business did not get any help from the market,' he added.
HRI also continued to lose money on its medical benefits division where new business dried up because of the uncertainties caused by the Clinton administration's healthcare proposals.
A deal to subcontract the loss- making administration side of this business was also delayed.
The impact from Downes & Burke, the discontinued fine art and jewellery business, was also twice as bad as expected. It will lose pounds 1.3m after a pounds 1.2m profit in 1992. The on- going business was earlier thought sufficient to allow the firm to break even.Reuse content