Few surprises as Fisons falls

14 March 1994 00:00  [Source: ICB]

PREDOMINANT FOCUS on pharmaceuticals and the gradual extraction from scientific instruments was the message from Fisons last week.

Following its profits warning (ECN 20 December 1993), the news that pre-tax profits had plunged from £124m ($185m) to £1m caused little surprise in a market which has been speculating that Fisons may be a takeover target. Operating profits were also down, by two-thirds, to £37m, while turnover rose 3% to £1.3bn.

The crash follows extensive one-off charges and losses at its scientific division. The termination of 'trade loading' which used to exaggerate year-end sales depressed profits in the drugs division by £32m to £42.2m. Scientific instruments reported a £40m loss. In contrast, laboratory supplies and horticulture saw their contributions advance to £28m and £4m respectively.

The group expects to cut overheads by an annualised £38m over two years due to a cost reduction programme which will mean the loss of 1000 jobs in the pharmaceuticals division. It is also set to sell or close about 30% of its scientific instruments division.

Pharmaceuticals remains the group's main interest. It has five new products in the exploratory development stage and the drugs operation has apparently already recouped two-thirds of the £80m sales it had lost by abandoning year-end loading.

Although rejecting the idea of a complete merger, Fisons said it is seeking partners for several products.

The hunt is also on to find a ceo to replace recently removed Cedric Scroggs. The company clearly wants 'an all-rounder' who can help it move on from its time as a fertiliser company. Newly appointed David Hankinson is to head up the finance division.

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