Barlo doubles interim profit to £2.1m as trade recovers

BARLO, the engineering and plastics group, has reported a strong improvement in its fortunes with profits doubling to £2.1 million in the six months to the end of September.

The group, which was restructured last year, said in a statement yesterday that it had benefited from a general improvement in its business and expected to be able to sustain a strong performance throughout the rest of the year.

Barlo chief executive, Dr Tony Mullins, said a more favourable currency outlook, lower raw material prices and strong economic conditions in its main markets should ensure a continued good performance over the next six months.

"In the absence of unforeseen circumstances, it is expected that the improved performance will continue in the second half," he said yesterday.

The group, which had to absorb, an exceptional restructuring charge of £5.95 million in its 1995 results, will not have to bear any further such costs in the current year, according to Dr Mullins. The group reported a 37 per cent drop in pre tax profits last year to £3.5 million after the restructuring charge.

The latest figures show that operating profits rose from £2.19 million in the same period last year to £3.03 million. Earnings per share increased from 60p to 122p. Despite the better performance, the shareholders interim dividend is unchanged at 4p.

The shares were unchanged in Dublin yesterday at 40p.

Barlo's radiator business in the UK enjoyed particularly strong growth while a recovery at its Stanley Smith Plastics division also helped to boost profits, Dr Mullins said.

Trading at its panel radiator operations in the UK was "satisfactory", according to Dr Mullins, mainly benefiting from increased activity in the construction sector.

In Europe, however, trading was subdued but has begun to show signs of improving demand.

Its plastic businesses also put in a better performance. Its new start up sheet plastic plant in the Czech Republic has gone smoothly into operation, he said, and is now selling into Poland, Hungary and the Czech Republic. The group plans to double its production capacity at the plant next, year.

Dr Mullins said its food packaging operations traded well in the first half with Stanley Smith Plastics making a positive contribution to profits.

Its underlying financial strength is also in a better position, with borrowing down from £25.4 million to £19.4 million, bringing its gearing down from 53 per cent to 44 per cent. The borrowings were mainly reduced as a result of lower raw material costs and proceeds from the sale of its IRG Wire subsidiary in Limerick earlier this year which was purchased by Tinsley Wire for £1.4 million. Dr Mullins said stocks were significantly reduced over the six month period.