Yule shares fall on low profit rise

SHARES in Yule Catto, the speciality chemicals and building products group, fell 15p to 232p after interim pre-tax profits edged forward 3.5 per cent to pounds 10.2m, slightly below City expectations.

Operating profits fell by pounds 373,000 to pounds 11.3m on turnover of pounds 126m, down by 10 per cent.

Net interest payable in the period to 30 June, however, dropped by 41 per cent to pounds 1.04m. 'Borrowings have consistently been at considerably lower levels compared to the previous year,' Allister McLeish, finance director, said. The interest charge was covered 10.4 times by operating profits at the half-year.

Earnings per share were up from 7.2p to 7.5p. Earnings have gone forward in each of the previous 11 full years. Mr McLeish said he was confident the pattern would be continued at the year- end.

Yule Catto, which Mr McLeish said was partly protected from recession by its wide geographic spread, would continue to 'forge ahead'.

The interim dividend was raised from 2.3p to 2.5p.

Pre-tax profits in the chemicals division were up by 8 per cent. Lord Catto, chairman, reported improving trends in domestic and export markets. Some 60 per cent of group sales are overseas.

But buildings products suffered from the depressed construction industry, with profits tumbling by 23 per cent to pounds 3.01m. The workforce has been cut by a further 4 per cent, after a reduction of nearly 10 per cent over the previous two years.

'We deplore the harsh economic circumstances which force us to make these manpower reductions,' Lord Catto said.

'Unsurprisingly the building product companies have experienced tough trading conditions, though most have turned in very respectable performances.'

He said business prospects overseas were generally better than in the UK. 'Despite the cushion which this provides, we do anticipate that this sector will report lower results for the full year.'