The company, which issued a profits warning last September, has made an exceptional provision of pounds 13.5m for the rationalisation of its German business. The German market will be supplied from TLG's other sites in Europe. TLG said the move would lead to annualised savings of pounds 4m in 1998/99, and pounds 5m on completion in 1999/2000.
Analysts were surprised by the German closure, but the group's full-year results, announced yesterday, were slightly ahead of market expectations which had been downgraded in the wake of last year's warning. Profit before tax was pounds 22.1m, compared with pounds 28.6m last year, but the exceptional provision took it down to pounds 8.6m.
Analysts said sentiment towards the stock remained poor, blaming tough competition in the electrical market. However, some took solace from TLG's enthusiasm about growth in the Far East and China. In Asia, where TLG entered into a joint venture with Jardine Pacific last year, sales grew on a like-for-like basis by more than 30 per cent.
There was also cause for guarded optimism in the UK as the company managed to push through a price increase despite competitive conditions and sales remained virtually static at pounds 130.7m. Sales of emergency lighting in the UK had doubled over the past five years, TLG said.
The company's chairman, Hamish Bryce, said he had had no contact with Wassall, the glue to cable and bottletops conglomerate, since it bought a 4.1 per cent stake in TLG in February this year.
But some industry commentators speculated that Wassall, which spent pounds 7m on the group, could launch an outright bid. Mr Bryce has said in the past that he would contest any hostile bid.
TLG is pinning its hopes on the launch of new products.Products developed over the past three years now account for 40 per cent of TLG's turnover.Reuse content