Acquisition gives Pifco pain

PIFCO, the electrical appliances company, has managed to stay in the black despite losses from Russell Hobbs Tower, the business it bought from the administrators of Polly Peck. Pre-tax profits slumped 68 per cent to pounds 1.2m for the year to 30 April.

Russell Hobbs Tower, which makes kettles, toasters and saucepans, was bought for pounds 7.8m shortly before the start of the 1991 financial year.

Michael Webber, chairman, said there were no unexpected pitfalls in assimilating the business, but it had been difficult. The purchase was a good one because it gave Pifco good brand names in high-volume markets.

Russell Hobbs Tower lost pounds 31m in the two years before Pifco bought it. The company did not specify what it lost last year but said most of the pounds 2.5m drop in profits was attributable to the acquisition.

However, Mr Webber said poor high street spending depressed profits from Pifco's original businesses as well. Together with Pifco, the company owns the Carmen and Salton brands.

The company's turnover jumped 71 per cent because of the purchase. Mr Webber said Russell Hobbs Tower was making small profits this year.

Trading profit margins dropped from 11 per cent to 3 per cent. Mr Webber said he hoped to rebuild the profit margin but it would not be possible to complete the task this year.

Earnings per share slipped to 13.9p from 32.6p but Pifco is holding the dividend at 7.75p. The shares fell 2p to 341p.