Gas blockage hits Victaulic

VICTAULIC, the plastic pipes and fittings company, suffered its first downturn in turnover since flotation five years ago, after falling victim to sharply reduced spending by British Gas on pipeline development.

Capital expenditure in the gas industry has slumped after uncertainty over the future structure and ownership of the gas pipelines network. Earlier this month British Gas's activities were referred to the Monopolies and Mergers Commission.

'We've taken quite a hit from British Gas,' said David Stewart, managing director of Victaulic, which supplies both the gas and water industries. Turnover in the half-year to 30 June fell by 10 per cent to pounds 51.2m. Profits were unchanged at pounds 10.9m.

'It is a new scene for us as a quoted company to see a reduction in turnover. However we went through this many times before flotation,' Mr Stewart said.

'There is little we can do about demand but we are confident the problems with British Gas will be solved.' He expects similar trading conditions in the second half.

Business with water companies also slowed slightly after a pause in pipe refurbishment programmes and some destocking by customers and distributors.

Mr Stewart said some companies had given priority to water and sewage treatments but predicted an increase in demand for polythene pipes in 1993-94 for tackling leakages and shortages.

Victaulic, which has about pounds 10m of net cash, received pounds 461,000 interest against pounds 57,000 last time. It hopes to double the contribution from its European interests to 20 per cent of group turnover.

Earnings per share were unchanged at 10.3p, but the interim dividend rose from 2.35p to 2.5p. The shares closed up 5p at 293p.