Cost-cutting pays off at South Wales Electricity

COST-CUTTING and the disposal of its loss-making electrical retail business helped South Wales Electricity, the smallest of the regional electricity supply companies, to lift pre-tax profits by 19.3 per cent to pounds 87m last year.

Wynford Evans, chairman, said that action taken last year to sell off retail arms and restructure the core business was showing through in a better deal for customers and improvements in performance.

'Cost reduction targets are being met, customers are benefiting from lower prices and we are maintaining a progressive dividend policy for shareholders,' he said.

A final of 15.7p makes a total dividend for the year to 31 March 1993 of 22.3p, an increase of 14.9 per cent. Mr Evans said that the underlying increase in profits was 6 per cent over the previous year.

Electrical contracting cost the company pounds 2.3m compared with a loss of pounds 3.8m the previous year. Swalec, as the company now calls itself, bought the Phoenix Electrical Company in June 1992 and expects the overall contracting business to make a profit of about pounds 1m this year.

Mr Evans said that the board's salaries would be frozen this year, reflecting the present situation in the market. However he added that Wales was benefiting from improvements in the economy, with GDP forecast to grow by 2.7 per cent to the year 2000, compared with 2.4 per cent for the UK as a whole.

There were a further 200 job losses during the year. The company has reduced its workforce by more than 15 per cent in two years.