Increase in tea price boosts James Finlay

A PICK-UP in tea prices on the world market helped to boost pre-tax profits for 1992 to pounds 10m at James Finlay, the Glasgow-based tea trader.

The company actually reported a pounds 10.8m profit in 1991, but this has been restated to pounds 8.9m to comply with the new FRS3 accounting standard.

Turnover rose to pounds 165.2m in 1992 against a restated pounds 143.7m the previous year.

Richard Muir, chairman, said that the company sold much the same quantity of tea last year, but that prices had risen because of severe drought in Sri Lanka, India and parts of Africa.

'The supply of tea was reduced, which firmed prices despite the absence of Russia, which was a big buyer, from the market.'

Mr Muir added that current trading was encouraging, with the crop up 10 per cent in Kenya. He said that he expected the problems in repatriating earnings from that country to be resolved soon.

Mr Muir said Finlay planned to continue its strategy of moving more into value-added products, such as instant tea and decaffeinated tea.

He pointed out that two-thirds of the instant tea sold in Britain was produced by Finlay. 'The fact that we are doing so well in a growing market endorses the quality of our product.'

Thorold Mackie, analyst at Bell Lawrie White, said: 'It is a very conservative company in a very conservative business. Mr Muir is doing the right thing in attempting to move into the value-added end of the market, but profits growth will be slow.'

Earnings per share fell to 4.7p (4.9p) because of a higher tax charge. The dividend is maintained at 4.15p. The shares fell 3p to 83p.