Casket shares hit by new warning

Shares in Casket, the Claude Butler and British Eagle bicycle manufacturer, slumped to an all-time low of 14.5p yesterday after it issued its second profits warning in seven months.

Casket said problems at its German subsidiary and a poorer-than-expected Christmas in Britain meant the company would show only a "modest profit" for the full year to March. Brokers had been expecting profits of £2.8m but Panmure Gordon downgraded its forecast to just £250,000.

A 20 per cent decline in the German market in the past year has hit Casket's German subsidiary, Heidemann Fahrrad, acquired in 1993. It is thought to have lost about £2m.

In Britain, bicycle sales were down last year to 1.9 million units compared with 2.1 million the year before. The Townsend business, which moved to a new factory last year, experienced operational difficulties.

The group's textiles business also performed badly as a result of the warmer autumn weather.

Casket, which claims to be the second-largest bicycle producer behind Raleigh, says it increased its share of the British market from 26 to 29 per cent but did so at the expense of lower levels of profitability.

The company said it planned to continue its expansion in the bicycle market while reducing its exposure in the textile sector. The directors said they would review the level of the final dividend.

Casket's directors, led by Joe Smith, chief executive, were thought to be buying shares in the company yesterday.