Raine's profits fall by a third

RAINE INDUSTRIES, the Derby-based housebuilder, saw pre-tax profits drop by a third to pounds 13.5m for the year to 30 June, but described the result as a strong performance in a depressed market.

Peter Parkin, chief executive, said the figures demonstrated the effectiveness of the management. The profits were 'in stark contrast to others in the construction industry'. He said the company's strength enabled the dividend to be maintained at 6p for the year, on earnings per share of 6.1p. City analysts forecast a bounce back in profits next time, with Amarjit Chhina of BZW predicting pounds 17m.

But Mr Parkin warned that a recovery in earnings rested on a return to economic stability in the UK, adding that the group was well positioned for an upturn.

'In the short term, Raine will concentrate on what it does best in activities where we have proven strengths and substantial market knowledge.' He added that recent interest rate cuts had not had any noticeable effect on the housing market because of 'confusion about economic policy'.

John Bancroft, finance director, disclosed that Walter Lawrence, the heavily indebted builder acquired by Raine in March, had turned in a pounds 500,000 loss for its first quarter under new ownership. But he added that its 'profitability is coming back after the turmoil surrounding the takeover'.

Mr Parkin said that Raine expected to realise pounds 28.9m from asset disposals at Walter Laurence, even if it took 'a prolonged period' to get fair value for them. This would substantially reduce gearing, now 34.6 per cent. 'I have got used to the luxury of living with low levels of gearing,' Mr Parkin said.

The company also announced yesterday that Mr Parkin was to take over as executive chairman from Nigel Rudd, who is non-executive. Mr Rudd remains on the board as deputy chairman, and David Vincent, in charge of the Hall & Tawse division, becomes group managing director.

The shares rose 2p to 85p.