Slimmer Savage resumes payout

SAVAGE Group, the shelving manufacturer, has returned to profit and restored the dividend after heavy cost-cutting in its European operations.

In the year to 30 June, taxable profits bounced back to pounds 2m from a loss of pounds 100,000 following closure of loss-making Benelux businesses and the disposal of a German division.

The company, which announced a reshuffle of non-executive directors, supplies shelves to multiple retailers like the DIY group B&Q, and sales are 75 per cent dependent on the UK market. The chief executive, Tony Philipson, said turnover in the first quarter of the current year was below last year's level because of reductions in stockholding by large customers. But demand had held up in continental markets.

Savage imports many unfinished products so sterling's devaluation will raise costs, but the company has a big export market in Germany, which is home to its main competitor. 'Therefore, I think we will be a net gainer from the currency fluctuation,' Mr Philipson said.

David Hargreaves, a non-executive with six directorships, has stood down because he could not spare the time, Mr Philipson said. His replacement is John Leek, executive director of Lilleshall and a former director at Hill Samuel.

Despite a poor start to the current year, Mitchel Teager, analyst at Albert E Sharp, said: 'Savage has taken a lot of costs out of the company so recovery should continue.' The dividend is 0.25p, and gearing has been reduced from 45 per cent to 36 per cent.