Clondalkin eyes further growth

The print and packaging company, Clondalkin Group, is looking for further growth following the rise in pre-tax profit from £8.93 million to £10.97 million in the six months to June 30th 1997. The outlook for the rest of the year is "satisfactory", according to chairman Mr Domhnall McCullough.

The group is gearing itself for further growth, said company secretary Mr Liam Bergin, who noted that Clondalkin had more than 30 operating units in six countries. Sterling and the dollar have appreciated strongly against the pound while continental European currencies, have been weaker. The net effect has been moderately positive. The latest results are in line with expectations. And it is on course to increase earnings per share from 38.80p in 1996 to around 46p this year.

Clondalkin is still on the lookout for further acquisitions. There were a "few on the table" but "we are choosy on the price we pay", said Mr Bergin.

Sales in the first have risen by 38 per cent from £133.06 million to £183.9 million. Pre-tax margins have slipped from 6.7 per cent to 6 per cent. This contraction was mainly due to a doubling of interest costs from £1 million to £2.3 million. The drop in operating profit margins from 7.5 per cent to 7.2 per cent, was less severe. Mr Bergin said the lower margins reflect the more competitive trading conditions and "keener pricing". Raw material prices have remained "relatively flat". Margins are not expected to erode much more but they should be less that the 8.4 per cent generated in 1996.

The latest results were boosted by contributions from Van der Windt, acquired in July 1996, and Chadwicks of Bury, acquired last January. Excluding these, there was just a small underlying growth.

Nevertheless, the interim dividend is being increased by 10 per cent to 2.636p. The tax rate fell from 28.2 per cent to 25.7 per cent, reflecting the group's geographical mix of profits. This led to a rise in earnings per share from 15.36p to 19.51p. The strongest performances were achieved in continental Europe and Britain, which now account for more than 60 per cent of group sales. Operating profit doubled in Europe, mainly due to the inclusion of results from Van der Windt. European flexible packaging made "steady progress", the interim statement said. In Britain, flexible packaging and rigid packaging were the strongest performing sectors. In Ireland, "results were steady throughout". In the US, sales and profits were below expectations in difficult markets. However, the group noted that the completion of installations in the first half would raise productivity and add new product opportunities in the second half.