Christian Salvesen cautions on profits

Christian Salvesen on Monday reined in profit expectations for the second time in three months as it blamed a continuing malaise in the engineering and automotive sectors for many of its problems.
The logistics group, which warned on profits in January, said results for the year to March 31 would be at the lower end of analysts’ expectations of between £29m ($41.5m) and £32m
The shares fell 4½p to 94p.
Christian Salvesen, which rejected a £530m approach from AB Custos, a Swedish investment group in 2000, said it had seen no sign of recovery in the industrial sector in the three months to the end of March. And it warned that these conditions were expected to continue into the first half of this year.
Robin Byde, analyst at Old Mutual Securities, cut his forecast of profit before goodwill amortisation and exceptionals from £33.6m to £32m in the year to March 2003.
Peter Aspden, finance director, said: “We were hopeful that volumes would pick up and they have not. If this persists then we are going to have a tough first half. It seems at the moment that it will persist.”
However, he said the forecast was that conditions would improve in the second half. He added that the food and consumer division remained stable.
Despite the further warning, and a 25 per cent fall in the share price over the last year, Mr Aspden insisted that the company had not received any takeover approaches, nor had the management explored the possibility of taking the company private.
Mr Aspden said he could not comment on the level of the final dividend.
“It is not for me to commit. It’s a board decision. At the moment, the board has not made its final decision. It is very aware that the share price is underpinned by the level of dividend.”
He said the Darfeuille acquisition in France was performing well. New management teams were in place in Germany and Spain, he added, implementing recovery plans which were expected to yield results within two years.
He said the cost of restructuring in Germany, with the closure of four sites, and the loss of 200 jobs, would be about £7m this year. Some 150 jobs had been cut to March 31, he said, with the remainder of the job losses to be implemented in September, with the closure of the fourth site.
However, he said that in the UK, no large structural changes were planned.
“We don’t want to be cutting into the muscle because we believe that the economy will pick up.”