Powell challenges dividends review: Chief executive defends payout policy

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BILL Andrews, chief executive of Powell Duffryn, yesterday criticised government attempts to influence companies' dividend policies.

Powell, the fuel, transport and engineering group, raised its dividend by 1p to 23.5p. The payment is covered 1.3 times by earnings per share, compared with a Stock Exchange average of two times.

Mr Andrews said: 'I do not believe that third parties have a role to play in the debate about the level of dividend payments. The decision rests with us as management, taking account of the views of shareholders.'

Stephen Dorrell, Financial Secretary to the Treasury, is conducting a review of corporate dividend payments, and has expressed concern that dividend commitments affect levels of capital investment.

In 1993, Powell paid a dividend that was not fully covered. Mr Andrews said its ability to generate cash justified the dividend and its payment did not affect the company's commitment to investment.

Taxable profits for the year to 31 March rose 55 per cent to pounds 36m. Last year's results, however, were blighted by pounds 9.6m of exceptional costs relating to the closure of Powell's UK railway engineering business.

Underlying operating profits rose 26 per cent to pounds 39.8m. Fuel sales benefited from stronger industrial demand. Powell's ports on Teesside and Humberside earned pounds 10.3m, a rise of 40 per cent.

Profits from engineering also increased. Powell's railway rolling stock business, now wholly based in France, depressed the performance. Profits from transport engineering slumped from pounds 600,000 to pounds 100,000.

The railway operation is losing money. Mr Andrews said it was suffering from a dearth of firm orders and unless things improved within the next few months, Powell would quit the business.