Dividend is slashed at Blagden

BLAGDEN Industries, the steel drum maker, has slashed its dividend from 4.5p to 1.5p for the half-year ended 27 June, writes Robert Cole.

The dividend cut reflects a harsh trading environment for the period. Taxable profits slumped to pounds 3m from pounds 6m, as difficult conditions on the Continent hit Blagden hard. Its key customers are oil companies and chemicals suppliers. The company said demand fell by 15 per cent last summer, and recovery has to date been slight.

The results would have been worse but for a pounds 400,000 currency benefit following the devaluation of sterling, and a pounds 600,000 property profit.

However, the reduced dividend does relieve Blagden's uncomfortable advance corporation tax position. Its ACT write-off fell to pounds 470,000 from pounds 600,000. But the percentage tax charge rose from 54 to 59 per cent because UK profits were particularly badly hit.

Cameron Smith, chief executive, said he hoped changes to the ACT system promised in the last Budget would soon be put on the statute book. Being able to offset ACT with foreign earnings would solve Blagden's problem at a stroke.

Mr Smith said the dividend was not cut to circumvent ACT. The group paid an uncovered dividend last year, and he wanted to restore cover. He said 1.5p was covered by earnings (ignoring the property profit) of 2p.