Markets hard to please as Bowater lifts profit by 44%

BOWATER, the printing and packaging group, disappointed the City yesterday despite raising profits by 44 per cent and paying out a dividend 13 per cent higher than in 1992. The shares closed 39p lower at 453p.

The main concern was a downbeat assessment from Michael Woodhouse, chairman, of prospects for margins in the group's European packaging operations.

He said that outside Australia, where the economy had improved steadily, there had been a move towards shorter order books and smaller order sizes.

David Lyon, chief executive, added that the trend towards plastic milk and juice containers had led to a price war with Plysu, Bowater's main competitor. Cosmetics volumes had fallen because of destocking and cheque printing made losses.

Profits from printing and packaging edged ahead from pounds 88m to pounds 90.9m despite a much bigger jump in turnover. The return on sales fell from 9.4 to 8.1 per cent, keeping the group margin flat at 9.1 per cent. Mr Lyon said the flurry of acquisitions over the past few years, which boosted sales at the coated products division from pounds 165m to pounds 448m, was now over.

Building products benefited from strong growth in replacement windows in the UK and Germany. Demand also rose in the US as a result of low interest rates.

Group pre-tax profits jumped from pounds 147.2m to pounds 211.9m on sales 36 per cent higher at pounds 2.14bn. Earnings per share were 15 per cent higher at 28.2p. The final dividend of 7.25p makes a full-year total of 12.6p.