Housing slump knocks Caradon profits
Thursday 28 March 1996
But further serious job losses beyond the 1,630 already announced are not expected. Caradon's chief executive, Peter Jansen, said: "The difficulty is in forecasting the UK market, where we have 50 per cent of our business. The general view is that while the first half will be difficult, the second half will show signs of recovery."
There had been no improvement in the early months of the year, he said, but it was difficult to call because the bad weather had kept the industry busy with emergency work such as burst pipes.
After a flat year for housing starts in the US, Mr Jansen said, "things are now getting better and our businesses are performing accordingly". But in Germany, where Caradon paid over pounds 100m for a half-share in the Weru doors and windows manufacturer last year, the picture continues to be gloomy. Housing activity is expected to be weak in 1996, although Mr Jansen insisted that the group remained very pleased with Weru, which remained a central part of its strategy.
Restructuring delivered pounds 25m of cost savings last year and Caradon expects an accelerated programme begun in September to deliver a further pounds 25m in the current year, making pounds 50m in all. But despite the company's efforts, pre-tax profits slumped from pounds 201m to pounds 114m in the year to December. The dividend for the year is held at 9.5p, after a final of 6.6p. The shares added 1p to 204p.
The results were hit by a pounds 27.6m restructuring charge in the original operations, of which pounds 12.9m related to the plumbing division and pounds 5.6m fell in the electrical business centred on MK Electric, the UK's leading plugs and sockets manufacturer. A further pounds 4.5m provision was taken in Weru, which announced last month that it would cut 170 jobs at its factory near Stuttgart.
Without Weru, Caradon's figures would have looked much worse. It contributed pounds 12m in its first eight months with the group, just enhancing earnings, but that was insufficient to offset pounds 15.5m losses from doors and windows in the US. Apart from the 7 per cent fall in US housing starts, the deficit was exacerbated by pounds 8m of one-off costs at the Better-Bilt subsidiary due to the introduction of a new computer system.
Mr Jansen said he believed there was "nothing to worry about" from the continuing Department of Trade and Industry investigation into unusual dealings in the group's shares prior to a profits warning that accompanied the interim results in September. He refused to comment further as the matter was sub judice.
He said there were no immediate plans to buy out the minority in Weru, nor to dispose of the security printing operation, which saw profits dip pounds 1m to pounds 38m last year.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Germany sees 'visible rise' in support for far-right extremism in response to perceived 'Islamisation' of the West
iJobs Money & Business
£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...
£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...