French subsidiary pulls down Bullough
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Your support makes all the difference.PROFITS at Bullough, the office furniture to refrigeration group, collapsed from pounds 20.8m to pounds 8.5m in the year to last October. The market had been warned in December that expectations were too high and Bullough's shares rose 2p yesterday to 110p.
Derrick Battle, chairman, blamed pounds 10m of the shortfall on the French office furniture subsidiary Atal, which he said had 'an appalling year'.
'We have been cutting costs as quickly as we can but it's necessarily in arrears,' he said.
The dividend was maintained at 6.05p per share despite being uncovered by earnings, which fell from 11.6p to 4.5p per share. Mr Battle said the decision to hold the level of the payout reflected confidence that it would be covered this year.
New management had been installed at Atal to see through a cost-cutting program. The workforce had been reduced by 30 per cent over the past two years and sales per employee are running at their highest level since the company was acquired four years ago.
Bullough said that with the benefit of hindsight it had bought Atal at the top of the market and admitted that it had failed to see the recession in France coming. Mr Battle said that French employment law made cutting staff numbers a slower and more expensive exercise than in the UK.
Sales at Atal fell 12 per cent last year and are still slipping. A further 6 per cent decline is expected this year.
Operating profits from France fell pounds 5.8m, reversing a pounds 3m profit into a similar loss. In addition to the trading loss, there was a pounds 2.4m charge to cover redundancies.
Overall, office products lost pounds 736,000 compared with a pounds 7.8m profit in 1991, with the UK operation, Project, also performing relatively badly.
Elsewhere, the refrigeration division, which supplies equipment to supermarket chains, suffered from delayed orders before the general election last April. Profits fell 19 per cent to pounds 6m although orders in the first two months are running ahead of last year.
BFN, the store-fitting subsidiary, also suffered from 'off and on' demand from do-it-yourself retailers. Heating, electrical and engineering businesses, small in group terms, broadly maintained profits.
BZW, the stockbroker, expects profits to bounce to pounds 15m this year, thanks to eliminated losses at Atal.
If achieved, that will still be Bullough's worst profits performance since 1985.
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