Ardagh profit up 12% to £5.8m

GLASS bottle manufacturer Ardagh has recorded a 12.2 per cent rise in pre-tax profit from £5,180,000 to £5,814,000 for the year to June 25th, 1996. This represents a maintenance of the growth generated in the first half.

Ardagh has attributed the profit increase to higher volume sales together with gains in productivity. Sales grew by 5-6 per cent from £33.9 million to £35.8 million. Group managing director, Mr Eddie Kilty said volume sales rose by about 5 Per cent while productivity improved by about 2.5 per cent.

Sales were helped by the good summer weather in 1995 which boosted sales of beer, soft drinks and mineral waters. Benefits, he added, were coming from the new compressed air system which was in, stalled during the year.

Costs per unit have come down. Price increases would be difficult to implement, he said, because customers looked at the sterling equivalent price per unit. With the pound remaining above sterling, that had been a "constraint".

Shareholders are to receive a higher payout. A final dividend of 3.60p net per share has been declared, making a total of 4.645p, representing an increase of 10.7 per cent on last year's level. Earnings per share grew from 13.55p to 14.81p.

Ardagh remains in a strong financial position, with cash of £10.9 million. This is reflected in the rise in interest receipts from £697,000 to £788,000. Interest now represents 13.6 per cent of profits, compared with 13.5 per cent. Mr Kilty said Ardagh was continuing to search for acquisitions in order to absorb the cash. While a number of companies had been identified, no acquisitions had been made because the multiples would have been too high, he noted. Trading in the first few months of this year was described as satisfactory. Sales, however, in the first half are expected to be lower than the first half of 1995/96, due to the weather. This is expected to be more than countered by higher sales in the second half, resulting in higher overall sales for the full year.

Asked about the impact of possible competition from Mr Sean Quinn, who is planning to set up a rival plant in Northern Ireland, Mr Kilty said he had no knowledge of such a plant, other than what has been speculated in newspapers. Some reports have suggested 1998 as a start-up date, but Mr Quinn, who has a cement plant and leisure and insurance interests, has remained tight-lipped about any expansion into the manufacture of glass bottles.