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.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
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

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?