Profits leakage deflates Calor

ANOTHER mild winter and a pounds 15m bill for reorganisation at Calor Gas led to a decline of nearly two-thirds in the interim profits of the bottled-gas group.

Profits before tax fell from pounds 32.7m to pounds 11.5m in the period to 30 June, on turnover down from pounds 214m to pounds 165m.

Earnings per share crashed from 13.2p to 4.1p.

However, the interim payout is being held at 6p and the company expects to maintain the final dividend even though it will not be fully covered by earnings.

Calor, which is 46 per cent-controlled by SHV, the Dutch company, is expected to end the year with virtually unchanged borrowings of pounds 20m, equivalent to about 15 per cent of its net assets.

The results reflect a pounds 11.4m exceptional cost for the extensive reorganisation that involved the loss of about 800 jobs, most of them in Britain.

Another pounds 3.4m was set aside against stock write-downs thanks to an 'over-ambitious' launch of a new gas product for the UK pubs market. Following remedial action, however, the business is currently performing to its internal targets.

Calor's profits fall was also partly the result of another mild winter, the fourth in a row, as well as lack of demand because of the recession. Volumes and the growth in Calor's customer base were adversely affected.

The results were accompanied by news that Folkert Schukken, a senior executive of SHV, who was brought in to master-mind Calor's restructuring, is returning to the Dutch company.

He is being replaced by Howard Robinson, who has been with Calor for 10 years, as the group's chief executive, effective from next January.

Michael Davies, Calor's chairman, is expected to be replaced by an SHV nominee 'in due course'. Mr Davies will become the deputy chairman.

Calor shares fell by 12p to 184p yesterday.