Paterson improves 7%: Third World and investments boost detergents group

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PATERSON Zochonis, the international soaps and detergents group, has benefited from relatively strong profit growth in the Third World and the booming world stock and bond markets.

In Nigeria, Kenya and Ghana profits grew in both local currency and sterling terms. Exports to South America and the Middle East have also increased.

Investment income on the pounds 167.1m investment portfolio has risen to pounds 16.38m in the year to 31 May 1993 from pounds 13.23m last year.

Operating profit has fallen to pounds 12.34m from pounds 16.19m. But this masks a rise in underlying profit because there was an exceptional gain of pounds 7.3m last year from the settlement of Nigerian debt arrears. Share of profits from associated companies has risen to pounds 5.56m from pounds 2.72m.

Pre-tax profit rose about 7 per cent to pounds 28.55m from pounds 26.65m. Earnings per share are up to 35.83p from 33.79p. The final dividend is 10.25p against 9.20p and the total dividend 12.60p compared to 11.45p. Turnover rose to pounds 233.4m from pounds 227.3m.

In the UK, Cussons - which makes Imperial Leather soap - improved productivity and produced 'satisfactory' profits with increased sales.

In Greece a surplus of olive oil, following two exceptionally good harvests, led to extremely competitive market conditions and, as a result, Minerva's profits fell.

Alan Whittaker, finance director, said: 'We have a good business in the UK but profits have been stable this year. The ones that have moved ahead have been the emerging markets.'

Paterson spent about pounds 3.2m on Pollena, a Polish manufacturer of soaps and detergents, and has earmarked a further pounds 4.75m for upgrading the manufacturing facilities during the next three years.

Mr Whittaker said that he was looking for more acquisitions in the UK, Eastern Europe or the Pacific, but so far had found the prices more than he was prepared to pay.

He added that pre-tax profits for the half-year to 30 November should be 'somewhat higher' than those of the same period last year - providing there were no adverse exchange rate movements.

Operating conditions are becoming increasingly difficult in Nigeria as the infrastructure deteriorates and foreign exchange reserves dwindle. Paterson has 40 per cent of a soap and detergent associate and 60 per cent of a white goods subsidiary there.

The ordinary shares were unchanged at 460p and the 'A' shares were down 1p at 418p.

(Photograph omitted)

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