Laird shares drop 20% as profits slump

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SHARES IN Laird, the engineering group, fell by more than 20 per cent after the company said its first-half profits would be over 40 per cent lower than last year.

Laird said cost pressures in its sealing systems business meant that pre-tax profits for the six months to June would be close to pounds 20m, down from pounds 34.7m in the same period last year.

At last month's annual general meeting, Laird said profits in the first four months of the year were running at a lower level than in 1997. Yesterday, the company said that the position in its sealing systems division had deteriorated.

"This will result in a loss in these activities for the first half of 1998," the company said. The company added that its other activities, which in 1997 accounted for over 80 per cent of total profits, "are expected to produce results in the first half similar to those of the first half in 1997".

The company's shares fell 91.5p to 297p following the profit warning, but they recouped some of their losses later in the day to close at 306.5p. The shares had started the day at 388.5p.

Ian Arnott, Laird's chief executive, said the main problem was that initial costs of operating the new car body seal plant in the US had been higher than expected.

Mr Arnott said: "We're sending out more experienced technicians from our plants in Europe to assist the production management in the States. The problem will be solved. Once we get the plant sorted out, it will enhance the value of our businesses overall." He added: "We are monitoring the situation on a daily basis."

In addition, the company said start-up costs on new plants in France and Spain amounted to approximately pounds 2m during the period.

Laird also identified some difficulties in Germany, where planned cost reductions have yet to be achieved and where margins had been forced down by strong competition. The company said that senior management changes had been made in Germany.