Tough markets set to slow Laporte down

LAPORTE, the speciality chemicals group, yesterday hinted ata slowdown in its record-breaking growth in 1999, with profits set to be hit by tough markets and a flurry of one-off charges.

The company, whose chemicals are used in toothpaste, paints and condoms, said the abolition of advance corporation tax, last year's sale of its hygiene division and sterling's continued strength would wipe around 5 per cent, or pounds 5m, from this year's profits.

The chief executive, Jim Leng, said that 1999 would be a "tough year" after a three-year unbroken run of record profits, earnings and margins. He warned that the company's problems could be compounded by difficult conditions in Far Eastern markets. "For the coming year, we expect no assistance from external factors or from the major economies in which we operate," he said.

However, Mr Leng claimed that the radical restructuring of the past three years - which transformed Laporte into a focused speciality chemicals business and caused the loss of almost 2,000 jobs - would see the company through 1999.Profits growth should pick up again in 2000.

Mr Leng's comments came as Laporte beat City expectations with a 1 per cent advance in 1998 pre-tax profits to pounds 134m on turnover up by 2 per cent to pounds 710.4m. The results received an pounds 18.1m boost from Inspec, the UK speciality chemicals company bought last year for pounds 600m.

The four-month contribution from Inspec led to a near-doubling in profits at Laporte's speciality organics business. Strong growth in the division - which makes chemicals for medicines such as Nurofen and the anti-impotence drug Viagra - offset a profit decline in the electronics business, which was hit hard by a slump in the market for semiconductors.

City analysts said the results proved that Mr Leng's three-year strategy of selling underperforming subsidiaries while moving away from cut-throat commodity markets was paying off. The key to Laporte's success is its strong margins, which last year rose to 16.7 per cent from 11.4 per cent in 1997.

While many of its UK peers were wrongfooted by a sharp downturn in global markets, Laporte has weathered the storm, thanks to its exposure to high- margin industries. Producing sophisticated chemicals for pharmaceuticals and life sciences companies pays more than churning out commodity products, and Laporte's margins are among the best in Europe.

Continued growth in the speciality organics division is paramount if Laporte is to achieve its target of 17.5 per cent margins in 2000.

Laporte's good performance triggered rumours of a takeover bid from Clariant, the Swiss giant. Mr Leng yesterday declined to comment, but analysts said bid speculation could prop up the share price.

Martin Evans, head of research at stockbroker Sutherlands, said: "For shareholders, there is a double support: speculative interest but also good growth prospects."

Laporte shares yesterday fell by 31p to 626p on profit-taking after a heady run. They are now on around 12 times 1999 earnings predictions of around pounds 136m. Mr Evans says this is a discount to many UK and European competitors, including ICI and Clariant, and Laporte should be bought despite the expected slowdown in 1999.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before