Norcros issues warning

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The Independent Online
Shares in Norcros plunged 17 per cent after the building materials group warned that wholesale reorganisation of the business would push it into a loss and threaten a final dividend.

The company, which also has printing and packaging interests, said several subsidiaries were to be sold in an attempt to create a more focused group.

EBC, the building management services group, also warned shareholders that write-offs will wipe out full-year profits and put a question mark over the dividend.

Norcros was one of the sector's worst performing shares last year, and its problems have worsened as the hoped-for recovery in the DIY and building markets failed to arrive.

Although pre-tax profits in the year to 31 March before exceptional items would be not less than £10m, reorganisation provisions would push the company into a loss. Annual profits last year were £17.1m.

The company said: "As a result, the level of the final dividend, if any, will not be maintained at its previous level.'' Last time's final dividend was held at 3.5p, making an unchanged 7p. Shares fell 17p to 80p yesterday.

Norcros said that although third-quarter sales were ahead, the pressure on margins continued as raw material costs had risen sharply. Reorganisation costs of about £2.5m have already been incurred, with a "further substantial provision'' to come.

At EBC, write-offs in the commercial and private housing sectors of £5.8m will wipe out full year profits of £750,000. The board is forecasting a final dividend of not less than 0.5p, implying a total payout of 2.25p, compared with 4p last time. EBC shares were unchanged at 61p as the news came after the market closed, but dealers expect a sharp correction today.