Hickson reshaping pays off in profits

THE reshaping of Hickson International after its 1980s spending spree has paid off in the shape of interim profits more than doubled to pounds 16.9m, writes Heather Connon.

The result, on sales down 24 per cent to pounds 162.3m, was largely due to the absence of exceptional provisions and lower interest charges after last September's pounds 70m rights issue.

Last year, the group set aside pounds 6.2m for restructuring and losses on the sale of businesses as an exceptional charge, with pounds 1.2m more treated as extraordinary. There was a further pounds 2m charge in the six months to June, representing extra losses expected on the sale of its remaining floor-covering arm, but this has been treated as extraordinary.

Interest charges also fell to pounds 960,000 from pounds 4.3m last time, reflecting both the rights issue and the proceeds of the disposal of the William Blythe subsidiary. Borrowings fell from pounds 83.6m - 1.3 times shareholders' funds - to pounds 23.5m.

Dennis Kerrison, who becomes chief executive after five months as chief operating officer, said the restructuring was now complete and the group was set for growth by expanding market share, organically and by acquisition.

The best performance came in protections and coatings, which supplies timber treatments mainly to the construction industry. It recovered from a poor 1991 to contribute pounds 3.8m, up 11.4 per cent. Fine chemicals, for pharmaceutical and agrochemical industries, improved 4.2 per cent to pounds 7.5m, despite higher depreciation on pounds 45m of capital expenditure in the past three years.

Earnings per share rose from 5.57p to 7.44p and the interim dividend was 2.85p (2.67p). The shares fell 14p to 174p.