Whessoe slides as prices are squeezed

PROFITS at Whessoe, the engineer based in Darlington, fell 11 per cent last year as customers squeezed prices.

Whessoe makes measuring devices and control equipment. Profit before tax for the year to 30 September declined from pounds 8m to pounds 7.1m.

Turnover advanced to pounds 91m from pounds 79.6m but the operating profit margin slumped from 9.3 per cent to 7.2 per cent. However, Chris Fleetwood, chief executive, said the margins could be rebuilt.

Whessoe has also made a provision for a loss of pounds 910,000 in a business it plans to sell. This would have depressed profits further but was masked by a pension fund credit of a similar size.

The company had two pension schemes but is now only injecting its assets into the larger fund. Whessoe benefited by pounds 977,000.

The company has been trying to sell its project engineering subsidiary for some time. Yesterday it said the negotiations had stretched management resources and that the division's profits suffered as a result.

Taxable profits fell by 10 per cent but earnings per share slumped by a quarter because of a rights issue in February.

The rights money was raised to buy Autronica, a Norwegian instrumentation company. The effect on earnings per share was made worse because Norwegian regulators delayed completion of the deal until July, creating a hiatus when the rights money was not invested in the acquisition.

Despite the fall in profits and earnings, the dividend was raised by 0.2p to 8.2p. The shares, which have fallen from 300p since the rights issue and are now trading well below the 260p rights price, dropped another 27p yesterday to close at 228p.