McKechnie hindered by problems in US

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The Independent Online
PROBLEMS in the United States continue to dog McKechnie, the plastics and metal components group, whose 22 per cent rise in half-year profits was due largely to its acquisition of Savage last year and rationalisation, writes Russell Hotten.

Only in its Pacific operations did McKechnie see real volume growth, but here too improved trading was boosted thanks to the success of recent purchases - Accord Industries in New Zealand and Phipps International in Australia.

McKechnie's pre-tax profits in the six months to 31 January were up from pounds 10.8m to pounds 13.2m, on turnover up 36 per cent to pounds 191.5m. Turnover included pounds 40.8m from Savage and other acquisitions, reducing organic growth to pounds 9.9m.

In the US, losses fell a further pounds 1.1m to pounds 2.1m, which the company blamed on de-stocking by customers and problems linked to a management shake-up. Michael Ost, chief executive, said the restructuring had been slower than ideal but the US business should be making operating profits by the fourth quarter of this year.

The integration of Savage, a DIY company bought for pounds 47.2m last April so McKechnie could tap into the housing recovery, had worked better than expected and should be completed during the second half.

Mr Ost said Savage made 'a substantial contribution to profits' and much of the rise in profits at McKechnie's consumer division, from pounds 3m to pounds 7.2m, was down to this acquisition. McKechnie shares fell 24p to 500p.

He said that in the UK, which accounts for 50 per cent of turnover, McKechnie was seeing the first signs of improvement in its markets for four years.

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