New car launches squeeze first-half profits at Laird

LAIRD Group expects to suffer a profits squeeze in the first half because of its substantial investments wrapped up in a slew of new car launches, the components supplier said yesterday.

The company notched a 7 per cent increase in turnover to top the pounds 1bn mark for the first time, but its sluggish automobile sealing system division sent share values plunging 38.5p to 436.5p.

Laird, which supplies technical rubber and plastic components, produced the sealing systems for a number of new car to be introduced this year, including the Volkswagen Golf and Vauxhall Astra. The company will also produces sealing products for Cadillac, Citroen and the Ford Focus, which will replace the popular Escort.

Laird poured more than pounds 90m into capital expenditure and acquisitions in 1997, in what Ian Arnott, the chief executive, called "firepower for the future". Laird's long-term agenda includes expansion in Spain, Italy, France and the US, and an pounds 8m computer product plant planned for Ireland

"The major investment projects do involve additional costs in the short run, and these, together with the higher costs associated with new car model launches have put pressure on profits in the initial months of 1998," the company said.

The company has run into problems with the latest version of the Golf, as the manufacturers changed specifications. "The Golf launch hasn't been easy," Mr Arnott said. The new Golf was unveiled to consumers in December.

"They've been hurt by the launches, but they will be very important to them in the future," Adam Collins, an analyst with Merrill Lynch, said. "It's hard to predict returns. The Astra and Golf were involved in specification changes and additional costs were incurred. The car company can decide to make a last minute change and the cost gets dumped on you."

Mr Collins said that a first-half crunch was to be expected because launches tended to run up investment costs and take longer to deliver returns. "At the moment it is a pretty bad period for car launches from their point of view, but it is a second half story this year."

The strength of the pound wiped a further pounds 6m from Laird's profits, despite 70 per cent of its output being outside of the UK. "If the pound continues to rise, it will hurt us," Mr Arnott said. "It doesn't help your competitive position."

The group reported pre-tax profits for the year to 31 December, 1997, of pounds 67.1m, up from pounds 66.6m previously. Earnings per share increased to 36.2p from 33.4p and total dividend rose to 14.3p from 13.0p. The results were in line with forecasts, analysts said.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence