Laird mulls disposals to boost performance

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The Independent Online
LAIRD, the maker of parts for cars and computers, may sell some of its businesses over the next few years in a bid to boost its performance and share price.

The chief executive, Ian Arnott, yesterday said that the group could divest some of its divisions, which range from rubber seals to insulate car bodies to computer casings, and focus its resources on the better parts of its business.

He said Laird had last year turned down several approaches over the sale of some of its subsidiaries. "We continue to review situation. In five years, Laird will probably be very different from now."

However, Mr Arnott quashed recent speculation of a bid for the whole group, saying that the company had received no offers

Some City analysts claim that investors' disapproval of Laird's conglomerate- like structure has been a major drag on its share price, which last year underperformed the market by up to 70 per cent. Mr Arnott rejected this view, saying that Laird's wide spread of activities provided the group with much-needed financial flexibility.

His comments came after Laird unveiled a 64 per cent plunge in 1998 pre- tax profits to pounds 23.7m on sales up by 7 per cent to pounds 1.1bn. The figures were depressed by a pounds 14.3m exceptional charge caused by the restructuring of its German car seal operations, which led to 350 redundancies.

The company was also hit by a pounds 16m loss at its new car seal plant in North Carolina, built in 1997 to supply US-based manufacturers such as Ford, General Motors and Volkswagen. Mr Arnott blamed the unexpectedly high loss on the low-quality rubber supplied by local manufacturers. He said that the material was so bad that Laird had to organise a costly airlift of rubber from Germany. However, the problems were now almost solved and the plant was set to move into profit at the end of the year.

The European operations of the rubber businesses were hit by several new model launches, including the new VW Golf and Renault Clio, which forced Laird to adapt its seals. A fire in a German factory added to the difficulties.

The computer casings division slowed dramatically after a couple of years of explosive growth. The chief executive said that the business, whose main customer is IBM, was hit hard by an influx of cheap Asian imports and saw profits slide by pounds 7m to pounds 54m.

Mr Arnott tried to reassure the market on the outlook. He said profits in the first quarter of 1999 were 20 per cent higher than in the same period last year, thanks to a rebound in seals and strong growth in Laird's building products.

The comments lifted the shares 6p to 232.5p but left City analysts unconvinced. "They are accident-prone, they are a mish-mash of businesses and need to get their acts together," said one.

Others pointed to the difficult markets Laird faces. Margins in car seals are one-third their level of a few years ago, while computer casings still struggle against Asian imports. The shares, on nine times 1999 forecast earnings of pounds 50m, are undoubtedly cheap. They are worth holding in the hope of a bid or a break-up.