13 July 1999 14:01 [Source: ICIS news]
LONDON (CNI)--A strong US performance helped UK-based international chemicals and polymers distributor Ellis & Everard (E&E) offset weak market conditions in the UK, enabling it to lift 1998-99 pre-tax profits before goodwill amortisation by about 2% to £32.9m ($51m/Euro50m).
Total turnover for the group increased 7.1% to £784.3m, including £64.6m from acquired businesses, E&E said Tuesday. Turnover for continuing operations fell 1.7% to £719.7m. Before goodwill amortisation of £700 000, the operating profit for the group increased 3% to £36.5m in the financial year to 30 April.
Jonathan Taylor, chairman, said: "Although it has been a difficult year in some areas, we have again demonstrated our ability to generate good returns across all stages of the cycle. I have no doubt that the current year will have its share of challenges, but it has started satisfactorily."
E&E also announced today that Taylor is to step down as chairman at the end of 1999 and will be succeeded from 1 January 2000 by Keith Hopkins, currently a non-executive director and also chairman of Croda International. Further top management changes, effective from 2 September, are US operations vice president Mark Kramer becoming executive director and Deryk King, a director of Kvaerner, becoming a non-executive director.
While activities in Ireland, fired by the country's strong economy, delivered "excellent" results, the group reported weak UK trading due to macro-economic conditions, strong sterling and weak oil prices. Trading in Europe as a whole delivered a 5.2% drop in sales revenues to £321.8m and operating profits before exceptionals fell 14% to £18.5m.
Taylor said: "Our UK chemical distribution business suffered from these factors but has nevertheless maintained, if not increased, market share." He added that the core commodity chemical business achieved a small increase in volume sales.
He said the need to upgrade older information technology (IT) systems in the UK has offered the group the opportunity to tackle supply chain issues in the country in a bid to boost profitability. The group plans later in 1999 to evaluate the IT strategy for its expanding US operations with a view to investment in 2000. John Samuel, finance director, said E&E had spent nearly £5m - or almost a third - of its £15.5m capital expenditure budget last year on its IT strategy for the UK.
US sales jumped 18% to $763m, with operating profits rising by 22% to $32.2m. Strong performances in the north east of the country overcoming slower progress in the south and west in industries such as oilfield services and textiles, E&E reported.
Taylor said that the group's growth plans continue to focus on the US market in the short to medium term. He said the industry is "ripe" for further consolidation but differences in buyers' and sellers' valuations of companies has slowed the activity. "The valuations are causing a pause", he said. The problem is partly caused by the stock markets' focusing on big companies, which results in differences in valuations between parties for small and medium sized firms, he added.
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