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Profit slump rounds off a miserable year
Page 8
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M by Dominic Perry
Christian Salvesen has rounded off a miserable 12 months by reporting a pretax profit of £20.1m—a whopping 30% down on last year. The firm has suffered numerous problems over the last year including depot closures, profits warnings and the selloff of its German industrial division, all of which have conspired to sink Its share price to 59p.
Despite seeing its turnover rise by 5% in the year ending 31 March, it managed to post a loss of £5.5m after exceptional Items, mainly connected to the German sell-off, were taken Into consideration.
Last month, the group said it had received an unsolicited expression of interest from a financial buyer, causing Its share price to rise, but in the statement It stresses that these talks have ended. It also warns of tough times ahead with both Its UK industrial and consumer goods divisions remaining under pressure, with margins reduced from 4.2% to 2,9%.
Chief executive Edward Roderick adds: "You can't be pleased with a set of results showing a 30% decline in profits, but they are better than some analysts were expecting. We are Improving the business—for example, the profitability of our UK industrial division improved in the second half and our Spanish operation returned to break even." Although the firm saes positive notes, including In its recent contract wins and renewals, analyst Alastair Gunn from Arbuthnot Securities takes a gloomier view: "There is a negative pricing environment In terms of the level at which new contracts are being won and old contracts are being renewed at lower margins. The other thing that's worrying is the downturn in FMCG (fast moving consumer goods) business—profits were down 20% overall, but down by 41% In the second half. That sort of decline is alarming."
He also knocks Salvesen's forecast of £.5m profit at its Spanish division next year: "It's a leap of faith to believe that's going to be achievable given the expectation that the European economy is going to be quite weak." However, he adds, the company should eventually return to profitability.
• David Fish, a non-executive director at Salvesen. will step up to replace Jonathan Fry as chairman this autumn.