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BOC Group: first quarter results

18 February 1999: British industrial gases company BOC Group Plc reported lower than expected profits recently, but pledged it was on track to reduce costs.
BOC reported a drop in pre-tax profit to U…

18 February 1999: British industrial gases company BOC Group Plc reported lower than expected profits recently, but pledged it was on track to reduce costs. BOC reported a drop in pre-tax profit to UK 84.9 million (US$ 138.6 million) on turnover of UK 704.2 million in the three months to 31 December 1998 compared with profits of UK 93.5 million on turnover of UK 902.3 million in the same period last year. Earnings per share slipped to 11.29 pence from 12.57p. Analysts had forecast first quarter 1999 profits for BOC Group between UK 88 and UK 103 million. Chief Executive Danny Rosenkranz said, however, that despite tough trading conditions, the company was on track to cut the costs of running the company by UK 50 million this year and by UK 120 million by April 2000. “While economic conditions point to flat gases volumes this year, our programme to reshape the BOC Group fundamentally to facilitate sales growth and reduce our costs is on track and will increasingly deliver the anticipated cost savings,” said Rosenkranz in a statement which accompanied the results. Rosenkranz also added that the company“s UK 120 million cost-cutting programme was already paying off and kept BOC competitive in the face of flat sales volumes. “Gases volumes were depressed but the profit impact was almost entirely mitigated by improved margins,” he said. Turnover for BOC gases in the three months to 31 December 1998 fell 4% to UK 627.8 million, while operating profits dropped only 1% to UK 94.4 million during the same period. He also said the company continued the restructuring programme it announced in August by shedding 2,041 staff and making disposals worth 130 million, which included the UK 112 million sale of BOC Gases“ assets in Benelux and Germany to the French firm Air Liquide in November. BOC will be organized globally along four different business streams. They will be BOC Process Systems, which provides large-scale on-site industrial gas supplies mainly for the chemical, petroleum and metal industries; Industrial and Special Products aimed at smaller-scale gas users; BOC Edwards which provides services to the semi-conductor industry; and Bulk Gases, targeted at industries including glassmaking and food processing.

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