Norcros keeps dividend promise

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NORCROS, the building materials and printing group, maintained an uncovered dividend for the second year in a row to keep a promise to shareholders who paid pounds 50m in a rights issue a year ago.

The shares rose 6p to 139p but still offer a yield of 6.3 per cent, well above the market average.

Michael Doherty, chairman, admitted markets had proved more difficult in the past 12 months than he had expected. But he said the company was more confident than it had been for some time.

Pre-tax profits jumped from pounds 2.6m to pounds 17.1m, although pounds 9m was accounted for by a one-off swing from loss to profit in the discontinued property division.

Underlying profits, excluding property and the cost of a recent redundancy programme, rose by about pounds 4m. Earnings per share were 6.6p and the dividend, cut from 16p in 1991, stayed at 7p.

Norcros's biggest division, Building Products, had a mixed year, with good results from the shower maker Triton and the window supplier Cego, offset by losses from window and door makers Crittall and Crosby Sarek. Crosby Kitchens also made a loss.

Mr Doherty said there was a marked improvement in demand from the residential market, especially for joinery products. Commercial work did not show any notable improvement until the final quarter.

Turnover in the division rose 9 per cent to pounds 165.5m, but the loss- making businesses ensured that profits were flat at pounds 5.9m. The three companies are expected to break even this year, but Mr Doherty warned of excess capacity and higher raw material prices.

Ceramics, which once enjoyed a 43 per cent share of the UK tile market, saw profits jump 64 per cent to pounds 9.2m thanks to higher presence in DIY stores such as Texas, Homebase and B&Q.

The improvement in the retail market covered a further decline in commercial building although the Australian sector performed well.

Profits rose in printing and packaging, which manufactures magnetic tickets, labels and film for the printing industry. An 8 per cent increase in sales translated into a 21 per cent jump in operating profits from pounds 8.9m to pounds 10.7m.

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