Barlo's annual profits tumble 37% to £3.5m

PROFITS before tax and exceptional charges at Barlo engineering and plastics group fell by 37 per cent to £3.5 million for the year to end March. After the exceptional restructuring charge of £5.95 million revealed in March, the group reported a pre tax loss of £2.48 million for the year.

The latest result is in line with some market expectations and ahead of the forecasts of the broker to the group, Davy, which expected a pre tax loss of £2.8 million. Barlo reported earnings per share of 1.98p before the exceptional charge and a loss of 1.58p per share after the charge. Earnings per share were 3.21p for the previous year. The shares closed unchanged at 40p yesterday.

Despite the latest figures shareholders are getting a final dividend of 0.6p per share, giving an unchanged full year dividend of 1p per share.

The fall in profits before exceptional charges reflects difficult trading conditions in the UK and European markets and the strength of the Belgian franc, according to chief executive Dr Tony Mullins. In a favourable trading environment Barlo's Irish operations performed well, he said.

In the current year the group expects to benefit from a restructuring aimed at reducing costs, but markets outside Ireland remain difficult, Dr Mullins said. Barlo "is now well positioned, with adequate and efficient capacity, to benefit from any upturn", he suggested.

Operating profits before restructuring charge fell by 22.6 per cent to £5.5 million on turnover which was down to £114.8 million from £115.6 million. A geographical breakdown shows that turnover increased in Ireland - up seven per cent to £25.5 million, but fell in the UK - down six per cent to £44.5 million. Turnover from other operations was marginally higher at £44.8 million.

Plastics packaging was the only activity where turnover increased up 8.2 per cent to £11.6 million. Turnover from radiators was 2.2 per cent lower at £59.4 million, while agricultural products fell 1.3 per cent to £16.1 million and industrial plastics was flat at £27.8 million.

Dr Mullins declined to disclose the operating results of the divisions, stating that his competitors did not do so. But he said all divisions were profitable.

Under the restructuring plan Barlo is relocating some of its industrial plastics manufacturing to the Czech Republic. This plant is due to go into production next month. The restructuring is aimed at maintaining the group's position as a low cost manufacturer, improve manufacturing capacity, products quality and service, Dr Mull ins said.

Relocation of production to a lower cost area will reduce costs and improve margins and competitiveness, he added. The restructuring should be "substantially complete" before the end of 1996, he said.