New European units boost Laird

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A STRONG first-time contribution from new car body seal plants in Germany and Spain and the absence of start-up and redundancy costs boosted Laird Group's first- half profits, which rose by 43 per cent to pounds 20.5m in the six months to 30 June.

The results, coupled with a 5 per cent increase in the interim dividend to 4.2p, left Laird shares 9p higher at 266p. In April Laird made a pounds 41.4m rights issue at 220p.

Sealing division operating profits more than doubled from pounds 6.7m to pounds 13.7m as production on body seals for the VW Golf 3 series and the Opel Astra at Draftex in Germany got into full swing and new plant in Spain came on stream. There was no repeat of pounds 2.5m in start-up costs incurred in the comparable period.

There has been concern in the industry that the fall-off in German car sales this year from peak levels in 1991 would eventually hit German car production.

'It is not apparent in our order books, where schedules go out for three or four months,' Charles Barton, Laird's finance director, said. 'Frankly your guess is as good as mine about the future direction of German car production, although we would obviously be exposed to cuts.'

Profits in the industrial product division, mainly automotive components in France, rose by 13 per cent to pounds 7.1m, although this improvement stems from the absence of a pounds 1.3m charge for redundancies in 1991.

Hoses and rubber mouldings benefited from improved French car production and a good position in supplying the successful Renault Clio and Peugeot 205. Against that, Laird's general engineering companies in Britain were loss-making.

Despite further strong progress at Fullarton in Scotland, supplying sub-contracted products such as computer keyboards, service industry division profits slumped by a third to pounds 3.5m.

Peter Caldwell of BZW is holding his forecast for 1992 at pounds 38m pre-tax, or earnings growth of 23 per cent, to allow for a slightly weaker second half. This points to a prospective p/e of 13 and a yield of 5.3 per cent, a top rating for a predominantly motor component company.