Upbeat BTR's profits rebound to £1.4bn

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BY MARTIN FLANAGAN

BTR, the industrial conglomerate whose share price slumped 14 per cent last autumn when it warned of margin pressures, rebounded strongly on the trading front yesterday with full-year taxable profits up 10.8 per cent to a record £1.41bn (£1.27bn).

The City was particularly pleased with news that profit margins had recovered to 16.2 per cent for the year compared with 15.2 per cent at half-time.

Alan Jackson, chief executive, caused the damage initially last September when he told analysts that overcapacity in many markets and raw material price increases, were putting BTR's return-on-sales under the cosh.

Yesterday, however, an upbeat Mr Jackson said the company, in an improving global economic climate, was able to pass on more of the raw material price increases - ranging from copper and bronze to rubber - to the consumer.

BTR is also thought to benefit from not being reliant on any one dominant raw material for its manifold businesses, which cover the industrial, transportation, construction, control and electrical systems, and consumer sectors.

Mr Jackson, who retires from the top job at BTR at the end of this year, said sales and orders in the early months of 1995 were significantly ahead of this time last year. He declined to be specific. BTR saw improved trading in many of its biggest markets, particularly the US and Australasia. The group's South-East Asia operations performed well, with increasing market prices for polymers providing a tailwind for the company's chemical businesses in Taiwan and the US. Asian expansion would remain a priority, Mr Jackson said. "It is the harvest area of our times."

The group is more cautious about the UK, however, saying domestic economic growth had proved less marked despite its companies in the automotive, industrial manufacturing and construction sectors doing better in 1994. There remained uncertainty about interest rates, with flat orders in the rail and electric power contract businesses.

Current gearing of 48 per cent is expected to fall below 35 per cent by the year-end, Mr Jackson said, giving BTR plenty of muscle for acquisitions. He would also not rule out a big move if the opportunity presented itself. "We are never out of the mood [for acquisitions]," he added.

Four of BTR's five divisions improved their profits performance, with the industrial arm setting the pace with profits of £396m (£270m). Transportation profits advanced to £348m (£335m), while construction contributed £205m (£171m). The consumer-related activities, taking in Dunlop Slazenger rackets to glass packaging, also advanced, while control and electrical systems saw its profits dip to £197m (£200m). Productivity and efficiency savings added £78m to operating profits in 1994, with 4,000 jobs going, about half in Britain. Capital investment in the company totalled £537m, 138 per cent of depreciation. A final dividend of 8.3p makes a total of 13.5p - up 10 per cent.

David Ireland,analyst at Hoare Govett, the broker, forecasts profits this year of £1.5bn.

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