Jarvis Porter bullish despite profits slide to pounds 6m

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The Independent Online
Destocking by the spirits industry led to a 10 per cent reduction in Jarvis Porter's sales of labels to drinks manufacturers in the six months to August, contributing to a slide in underlying group profits from pounds 7.3m to pounds 6.1m. Despite the fall, Jarvis's shares closed 10p higher at 212.5p as the market focused on a 9 per cent rise in the dividend and a bullish assessment of second-half prospects from the chairman, Paul Jarvis.

Speaking after the announcement of the figures, Mr Jarvis said: "Over the last six months we have started to implement our World Class Strategy with a series of initiatives attacking our cost base, reorganising our businesses and investing in the future growth of Jarvis Porter. The second half of the year has started more strongly, following the mixed trading conditions of the first and the benefits of our initiatives will start to flow through in the next financial year."

Following the acquisition two years ago of Donprint, a Scottish manufacturer of product identification labels for the likes of IBM and Compaq, Jarvis has embarked on a massive restructuring of its businesses with production reorganised and staff split into dedicated "cells" serving individual clients such as Unilever and SmithKline Beecham.

The change has involved a retraining programme, new computer systems and physical reorganisation of machinery in a bid to offer a "seamless" service to big multinational customers in the toiletries and pharmaceuticals industries.

After the cost of the reorganisation, profits emerged at pounds 5.1m, with earnings per share sliding from 10.2p to 7.1p. Mr Jarvis said a rise in the interim payout from 2.15p to 2.35p reflected confidence in future earnings growth and the fact that net debt of pounds 6.5m was only marginally higher than a year earlier, representing gearing of only 23 per cent.

Apart from the downturn in spirits labels, there was a slowdown in sales growth to the computer and electronics industry at a time when investment was stepped up to provide capacity for projected expansion. That offset good demand from home and personal care customers.

Mr Jarvis said he believed trading had improved since September, with deliveries to drinks customers rising closer to the levels originally budgeted for. The computer and electronics industry was also returning to a faster rate of growth.