Write-offs tear hole in Cookson profits

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LOSSES on the sale of unwanted businesses tore a pounds 50m hole in interim profits at Cookson, the industrial materials group, writes Robert Cole.

The write-offs obscured a strong underlying increase in profitability for the six months to June.

Pre-tax profits fell from pounds 42.4m to pounds 3.6m, but operating profits moved up from pounds 49.8m to pounds 63.5m.

In March, Cookson sold its lead and aluminium processing business to Calder Group, a private concern, for pounds 71m, leading to a pounds 50m goodwill write-off.

Robert Malpas, chairman, said like-for-like profits advanced 31 per cent.

Cookson also increased its profit margins from 7 to 8.3 per cent despite facing price pressure from customers. The company was particularly successful in the US, where profits rose from pounds 28m to pounds 42.2m, and the margin widened from 7.8 to 10.6 per cent.

Cookson sells laminates and solder constituents used in the manufacture of printed circuit boards, and orders from manufacturers of personal computers and telecommunications equipment have increased.

Profits from Cookson's worldwide electronics materials business grew by 42 per cent to pounds 24.5m.

The plastics division saw profits rise 88 per cent to pounds 16.9m. Including the goodwill write-off, Cookson made an overall loss per share of 2.4p, against earnings last time of 5.6p. Underlying earnings, however, rose from 4.6p to 6.6p. The dividend was lifted 7 per cent to 3.2p and the shares rose 6p to close at 258p.