Kvaerner profits halved to pounds 71m

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The Independent Online
Kvaerner, the Norwegian conglomerate that earlier this year paid pounds 904m for British shipping to engineering group Trafalgar House, saw profits crash in the first half of the year.

Pre-tax profits more than halved in the six months to June, sliding from Nkr1.6bn (pounds 161m) to Nkr706m (pounds 71.3m). The Trafalgar House purchase, which made Kvaerner one of the world's largest makers of offshore oil and gas equipment, was consolidated for only two months of the period and was said to have had a neutral effect on the bottom line.

But the group was criticised by Oslo-based analysts for its failure to give more than sketchy details concerning Trafalgar House and the potential synergy benefits of the acquisition.

Chief executive Erik Toenseth admitted the results were disappointing, but claimed that the process of integrating Kvaerner's and Trafalgar House's activities was proceeding as planned. "All in all we believe in better results for the second half of the year."

However, the results would be strongly affected by the rate of sales of assets other than the group's core activities, he said. Kvaerner has already disposed of some of the Trafalgar House assets, but a decision has to be made on what to with others, including the troubled cruise company Cunard.

Mr Toenseth said there were sound reasons for considerable optimism that objectives following the acquisition would be achieved. "Comprehensive action has already been taken to realise the significant synergies that exist by the co-ordination of our business streams."

Kvaerner Construction was hit by continued heavy competition in the UK market, which offset good profits overseas, particularly in Hong Kong.

There were also deficits in mechanical engineering and Cunard, but other areas of the former Trafalgar House empire formed brighter spots.

Kvaerner John Brown, the process plant engineering business on the Clyde, produced profits of Nkr15m (pounds 1.5m) for the two months of ownership and the order backlog stood at Nkr10.5bn (pounds 1.1bn).

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