Suffering APV glad of fall in pound

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The Independent Online
CLIVE STROWGER, chief executive of APV, the food process plant maker, yesterday welcomed the pound's devaluation, claiming it would enable the company to bid against European competition for contracts whose prices were previously unattractive.

If base rates were to fall from their present level of 10 per cent, this too could give UK customers confidence to increase spending on process plant equipment.

He was speaking as APV, which earns more than 80 per cent of sales from overseas customers, reported a 28 per cent fall in first-half pre-tax profits to pounds 12m before exceptional items. The interim dividend is held at 2p compared with earnings of 2.8p.

He said APV's order book at the end of June was in line with the same time a year ago but warned that intake in July and August had been disappointing.

Analysts cut forecasts after the results and APV shares fell 3p to 79p where they yield 9 per cent on a maintained dividend. Sandy Morris of County NatWest reduced his forecast from more than pounds 30m to pounds 26m. This would still generate enough earnings to cover a total 5.4p dividend, which he expects to be held.

Operating profits, before a pounds 2.1m restructuring charge in 1991, fell by 19.5 per cent to pounds 16.5m as margins declined from 5.1 per cent to 3.8 per cent.

The setback was largely confined to APV's dry foods activities, which were hit by a retrenchment of spending plans among its bread, cereal and cake manufacturing customers. This cut turnover from pounds 142m to pounds 127.8m.

Lower volume and under-utilisation of its new pounds 30m Peterborough plant drove dry food margins down from 3.9 per cent to 1.1 per cent and slashed profits from pounds 5.6m to pounds 1.4m.

Problems with French bread making machinery lay behind a slump in profits from pounds 7.4m to pounds 4.5m in continental Europe. The biggest territorial improvement came from loss elimination in Asia Pacific, which made a profit of pounds 900,000 against a pounds 300,000 loss.

Liquid food machinery fared better with sales up by 19.5 per cent to pounds 247.3m and profits up from pounds 10.5m to pounds 11.3m.

A strong performance by Ventaxia, the ventilation fan manufacturer, failed to prevent a fall in profits from pounds 4.4m to pounds 3.8m in APV's non-food activities.