Headline profits slumped from pounds 67m to pounds 36.4m in the six months to June and even after stripping out exceptionals, including pounds 23.9m of losses on disposals, there was a slump in continuing operating profits from pounds 66.9m to pounds 62.4m. The bald results hide the effects of the group's reshaping, however.
With the pounds 7.8m sale of businesses in Thailand, Brazil and France announced yesterday, Laporte has raised close to pounds 60m from disposals and cut the number of locations by 27 to around 100. The original plan to dump around pounds 100m of turnover has been reached ahead of time, with more sales to come, and the new Laporte is already looking a lot more sensible.
Now focused on businesses such as electronics and fine chemicals, where management expects growth rates of at least 45 per cent, or where it has leading market positions, like electronics again, compounds and water technology, the group is well placed to grow. Mr Leng puts the natural rate of growth at 4-6 per cent, before any enhancement that can be squeezed from mix, price and further cost savings, expected to be pounds 10m next year.
The only problem area in the half-year was speciality organic chemicals, used in pharmaceuticals and polymers, where profits slid from pounds 14.2m to pounds 8.9m. A big contract with BASF ended and Laporte, a supplier to Glaxo Wellcome, will be hit when the drugs group's best-selling Zantac comes off patent in March.
Even so, and with the shares on a forward p/e ratio of 17, assuming full- year profits of pounds 120m, the outlook is better than for many in the sector and an expected sale of the old Evode adhesives and sealants businesses would provide a fillip. Hold.