Spring Ram back in black

BY WILLIAM GLEESON

Spring Ram, the kitchen and bathroom manufacturer that came close to collapse 18 months ago, reported a profit before tax of £3.3m for the year to the end of December, a turnaround of £39.7m on the previous year's £36.4m loss.

The profits were achieved by disposing of some loss-making businesses and improving the performance of others.

Turnover was up 7 per cent to £256.6m compared with £239.5m the previous year.

The results are in line with City expectations. The turnaround was achieved despite difficult conditions in the company's main markets, kitchens and bathrooms.

Roger Regan, chairman, said: "This year is the first of our three-year recovery programme. We now face the job of making profits reasonable; they are not reasonable now.

"Market conditions for our products are determined by housing market conditions. We see continuing difficulties," Mr Regan said.

"Improvement in profitability will have to come from efficiencies and driving hard into Europe," he added. Margins would continue to be squeezed by rising raw material prices, while selling prices remained flat.

The company generated £13.5m from operating activities which contributed to £18.6m positive net cash at the year-end. Bank loans and overdrafts last year were £24.8m.

Scott Fulton, an analyst with Smith New Court, said: "The company still faces uncertainties. At some point it will have to see growth in its market. But there is no sign of this growth. This stock is worth holding on to, but it has some way to go before we become full-blown buyers."

Mr Fulton is expecting £17m pre-tax profit for 1995, giving a price/earnings ratio of 13.5.

Earnings per share are 0.7p, up from a loss of 10.5p last year.

The company is paying a dividend of 0.5p per share compared with 0.095p per share last year.

The share price moved down 1p to close at 39p.