UB shares hit by profits warning

Shares in United Biscuits tumbled 15p to 331p yesterday after the food and snacks group issued a profits warning just three months after a gloomy trading statement earlier this year.

The chairman of the McVities biscuits to KP snacks group, Sir Robert Clarke, told shareholders at the annual meeting that first-half pre-tax profits would be "significantly" below the 1994 level. He blamed rising raw material costs for much of the damage.

UB was steadily raising prices to compensate, but the delay in passing on costs was expected to lead to some under-recovery of costs in the first half, he warned, while profits would also be hit by a higher interest charge and increased marketing investment.

Sir Robert said there should be a significant year-on-year improvement in the second half, but that did not prevent analysts' worries that full- year profit predictions may be too high. The consensus forecast is for UB to make full-year profits of just over £180m in the year to December, but one analyst said yesterday he was considering shaving his figure by £10m.

Despite the fall in the share price, the latest news will heighten speculation about a bid for the group by Hanson, which has barely disguised its interest in buying a non-cyclical, UK-based business. Valued at about £1.7bn, UB would be easily digestible by Hanson, which is about to be relieved of $1.4bn of debts through the impending demerger of US Industries.

UB warned at the time of its 1994 annual results in March this year that trading conditions were likely to remain tough in all markets and that results would be affected by high input cost inflation, particularly in packaging, and rising worldwide interest rates.

It also said then that a substantially higher level of new product introductions, increased marketing investments and an aggressive attack on costs in all divisions was planned.

The group has also been hit by pricing pressure on brands such as KP crisps from supermarket own-label products.

The outgoing chairman, Sir Robert Clarke, told the annual meeting yesterday the group was gradually achieving price increases to reflect higher input costs in most markets, but this was taking time.

"Additionally, our increased borrowings, resulting from the most recent acquisitions and a number of restructuring programmes, coupled with higher worldwide interest rates, will produce a significantly higher interest charge than in 1994." Sir Robert said said. But he added that the first half outlook should not be seen as indicative of prospects for the full year.

The group expects a "significant" year-on-year improvement in the second half, as the benefits of the higher levels of investment in marketing and new product development begins showing through in stronger market share performance.

The full benefit of the price increases implemented or in the pipeline would also be seen.

PROMOTED VIDEO
Arts and Entertainment
Neil Young performs on stage at Hyde Park
musicAnd his Hyde Park set has rhyme and reason, writes Nick Hasted
News
Women have been desperate to possess dimples like Cheryl Cole's
people Cole has secretly married French boyfriend Jean-Bernard Fernandez-Versini after just three months.
Arts and Entertainment
AKB48 perform during one of their daily concerts at Tokyo’s Akihabara theatre
musicJapan's AKB48 are one of the world’s most-successful pop acts
News
Ian Thorpe has thanked his supporters after the athlete said in an interview that he is gay
people
News
The headstone of jazz great Miles Davis at Woodlawn Cemetery in New York
news
Arts and Entertainment
Brendan O'Carroll has brought out his female alter-ego Agnes Brown for Mrs Brown's Boys D'Movie
filmComedy holds its place at top of the UK box office
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
newsBear sweltering in zoo that reaches temperatures of 40 degrees
Arts and Entertainment
Professor Kathy Willis will showcase plants from the Royal Botanic Gardens at Kew
radioPlants: From Roots to Riches has been two years in the making
Extras
indybestThe tastiest creations for children’s parties this summer
Arts and Entertainment
TV The follow-up documentary that has got locals worried
Arts and Entertainment
Paolo Nutini performs at T in the Park
music
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

Sales Executive - Central London /Home working - £20K-£40K

£20000 - £40000 per annum: Deerfoot IT Resources Limited: Sales Executive - Ce...

HR Advisor - 6 months FTC Wimbledon, SW London

£35000 - £40000 per annum + Benefits: Ashdown Group: HR Advisor - 6 Months Fix...

Information Security Manager (ISO 27001, Accreditation, ITIL)

£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

Biztalk - outstanding opportunity

£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

Day In a Page

Super Mario crushes the Messi dream as Germany win the 2014 World Cup in Brazil

Super Mario crushes the Messi dream

Germany win the 2014 World Cup in Brazil
Saharan remains may be evidence of the first race war, 13,000 years ago

The first race war, 13,000 years ago?

Saharan remains may be evidence of oldest large-scale armed conflict
Scientists find early warning system for Alzheimer’s

Scientists find early warning system for Alzheimer’s

Researchers hope eye tests can spot ‘biomarkers’ of the disease
Sex, controversy and schoolgirl schtick

Meet Japan's AKB48

Pop, sex and schoolgirl schtick make for controversial success
In pictures: Breathtaking results of this weekend's 'supermoon'

Weekend's 'supermoon' in pictures

The moon appeared bigger and brighter at the weekend
Iraq crisis: How Saudi Arabia helped Isis take over the north of the country

How Saudi Arabia helped Isis take over northern Iraq

A speech by an ex-MI6 boss hints at a plan going back over a decade. In some areas, being Shia is akin to being a Jew in Nazi Germany, says Patrick Cockburn
The evolution of Andy Serkis: First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes

The evolution of Andy Serkis

First Gollum, then King Kong - now the actor is swinging through the trees in Dawn of the Planet of the Apes
You thought 'Benefits Street' was controversial: Follow-up documentary 'Immigrant Street' has got locals worried

You thought 'Benefits Street' was controversial...

Follow-up documentary 'Immigrant Street' has got locals worried
Refugee children from Central America let down by Washington's high ideals

Refugee children let down by Washington's high ideals

Democrats and Republicans refuse to set aside their differences to cope with the influx of desperate Central Americas, says Rupert Cornwell
Children's books are too white, says Laureate

Children's books are too white, says Laureate

Malorie Blackman appeals for a better ethnic mix of authors and characters and the illustrator Quentin Blake comes to the rescue
Blackest is the new black: Scientists have developed a material so dark that you can't see it...

Blackest is the new black

Scientists have developed a material so dark that you can't see it...
Matthew Barzun: America's diplomatic dude

Matthew Barzun: America's diplomatic dude

The US Ambassador to London holds 'jeans and beer' gigs at his official residence – it's all part of the job, he tells Chris Green
Meet the Quantified Selfers: From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor

Meet the 'Quantified Selfers'

From heart rates to happiness, there is little this fast-growing, self-tracking community won't monitor
Madani Younis: Five-star reviews are just the opening act for British theatre's first non-white artistic director

Five-star reviews are just the opening act for British theatre's first non-white artistic director

Madani Younis wants the neighbourhood to follow his work as closely as his audiences do
Mrs Brown and her boys: are they having a laugh?

Mrs Brown and her boys: are they having a laugh?

When it comes to national stereotyping, the Irish – among others – know it can pay to play up to outsiders' expectations, says DJ Taylor