Laporte reveals slowing sales in market downturn

Click to follow
The Independent Online
LAPORTE, the chemicals group undergoing a major overhaul, yesterday revealed slowing sales and warned that its major markets had deteriorated.

In a trading statement the company, which is selling non-core businesses to focus on specialty chemicals, said market conditions were "more challenging than six months ago".

The slowdown was particularly harsh in the electronics division, which makes chemicals for computer microchips.

Jim Leng, chief executive, said the business had had a a very tough time as the semiconductor industry suffered its biggest downturn in 30 years. Second-half profits in the division, which accounts for 10 per cent of group sales, would experience a "material reduction", the statement said.

However, Mr Leng expects Laporte to meet analysts' expectations of annual profits of pounds 130m, thanks to a good showing by specialty chemicals. Sales in the division, boosted by August's pounds 600m purchase of Inspec, were helped by strong demand from the drugs sector.

The company announced the sale of its hygiene division to its management for pounds 31m. The money will be used to reduce Laporte's debt mountain, which stands at around pounds 500m after the Inspec acquisition. Mr Leng said the company was not under huge pressure to bring down its borrowings as interest cover stood at a comfortable 4.5 times.

He said the sale was consistent with his strategy of exiting non-core business. The division would have needed further investment as the European market for hygiene products was very competitive and very fragmented.

"You can't stay in non-core businesses where you have to keep acquiring to fill geographical and product gaps," he said.

Laporte shares rose 0.5p to 464p yesterday.

Comments