Newman shares rise despite profit fall

Click to follow
The Independent Online
NEWMAN TONKS found favour in the City yesterday despite reporting a drop in profits and heavy write-offs that left the dividend uncovered. Shares in Europe's largest supplier of door, window and electrical fittings to the construction industry climbed by 11p to 135p, writes John Shepherd.

Profits before tax for the extended trading period to December were pounds 13.3m, against the pounds 15.1m made in 1991. Attributable profits slumped to pounds 157,000 after pounds 8.3m of extraordinary charges, mainly relating to losses on sold and discontinued businesses.

As expected, there is no final dividend. A second interim dividend of 5.5p has been declared, which left the total payout at 9.3p. The dividend cost pounds 12.2m.

'We hope that in the coming year we won't see any more write-offs. We are seeing the benefit of rationalisation and reorganisation,' said Geoff Gahan, chief executive, mindful of the 18 per cent cut in staff numbers over the past two years.

He said this year had started well, particularly in the US and Germany.

The devaluation of sterling, he added, 'makes our UK manufacturing companies more competitive in world markets than at any time in the recent past'.

Half of Newman's business is overseas, and is being increased through a pounds 900,000 acquisition of an 80 per cent stake in H Leighton Hill, a New Zealand-based sales agency company. Leighton will be the sole supplier in Australia and New Zealand of Briton door controls made by Newman.

'It would be premature to say the UK is coming out of recession, although it appears to me that we have bottomed. We do not anticipate any significant recovery in the UK building industry in 1993,' Mr Gahan said.