Sales rose 6 per cent and profits were up 2 per cent to pounds 220.1m before deducting an exceptional charge of pounds 40m. The interim dividend has been increased from 3.5p to 4p, but the profits were slightly below most City forecasts. The shares, which touched 378p last March, shed 13p to 228.5p.
Greg Hutchings, Tomkins' executive chairman, is confident that the company's inherent strengths will deliver a satisfactory result for the full year. But trading operations have become more challenging since the year end, and market conditions allow few opportunities for price increases.
The industrial and automotive division is suffering from falling demand, and growth in the current year to the end of April is unlikely to match the previous year, when profits grew by 15 per cent.
Food manufacturing, which is strongest in the UK and France, continues to expand and sales of frozen bakery products to McDonalds, Marks & Spencer and Pizza Hut have doubled in the last two years. Demand for construction components, which sell primarily in the US, remains steady. Orders for components from US car companies, including replacement parts and new vehicles, remains satisfactory.
Gates, the group's specialist supplier of power transmissions and hoses in the US, grew sales by 4 per cent.
But the industrial sector is weakening and customers in the agricultural construction engineering and paper and packaging are cutting back.
In the past two years Tomkins has sold 22 companies and spent pounds 750m on acquisitions. Gearing remains low at 15 per cent and Tomkins' strategy of actively acquiring new businesses and disposing of under-performing pieces continues to meet with approval in the City.
Profits forecasts for the current year have held up well over the past year, with the consensus down only slightly to pounds 530m until yesterday.
But in the light of the latest figures one analyst yesterday downgraded profits for the full year from pounds 523m to around pounds 510m and earnings per share of 24p. This compared with full-year profits of pounds 500.4m and earnings of 23p in 1997-98.Reuse content