18 December 1997: In a recent statement, BTR Plc of the United Kingdom highlighted changes in its trading environment.
According to the diversified group, the economic downturns in Asia and South Ame…
18 December 1997: In a recent statement, BTR Plc of the United Kingdom highlighted changes in its trading environment. According to the diversified group, the economic downturns in Asia and South America, and the continued strength of sterling have affected overall performance and led to expectations that continuing profit in the second half of the year (excluding acquisitions), will be more or less in line with the restated first-half results. In September, BTR had announced first-half continuing profit (excluding acquisitions) of UK 601 million. As a result of the disposal programme, the restated first-half operating profit for the continuing businesses would be approximately UK 565 million. BTR successfully achieved the disposal of its polymeric products businesses for UK 515 million ahead of schedule. This disposal represents over 15% of the revenues identified for disposal in September 1997. On the basis of disposals to date, BTR expects a contribution to profit before tax from discontinued businesses of around UK 25 million in the second half (the first-half figure was approximately UK 40 million). BTR expects acquisitions to date in 1997 to contribute around UK 25 million in profits for the full year. The statement also detailed currency exchange impact on group figures. Sterling continued to strengthen against other currencies thereby further affecting the translation of profits. In the first half of 1997, currency movements had an adverse translation impact against the same period in 1996 of UK 43 million in terms of operating profit. At that time, the group estimated that the full year translation impact would be around UK 63 million. However, as the average 1997 sterling exchange rate has continued to strengthen, BTR now expects the full-year translation impact to be about UK 75 million, assuming that currency rates remain at their current level. Commenting on the December review, Ian Strachan, Chief Executive of BTR, said: “We have made a good start towards our objective of turning BTR into a focused engineering group. Divestment of non-engineering activities is proceeding in line with expectations, and attractive acquisitions, like Exide, have been made to augment our engineering businesses. Investment in the engineering core will be stepped up as cash is realised from disposals, and a significant proportion of the proceeds will be returned to shareholders.” BTRs disposal programme consists of two phases. The Phase 1 disposal programme of low-growth, low-return businesses announced in September 1996 (representing some UK 2.3 billion of 1995 turnover) is, said the recent statement, 90% complete. In the second phase, BTR announced in September 1997 that it would divest its non-engineering businesses, Packaging & Materials, Building Products and Polymeric Products, which represented UK 2.8 billion of 1996 sales. These businesses have few synergies with the Engineering Group and are mostly regional. The majority of the overall divestment programme is expected to be completed by the end of 1998. BTR“s packaging operation is reporting mixed results across its sectors and geographic regions. The UK glass operation is maintaining profit growth, following continued capital and technology investment while plastic packaging continues to show strong profit performances in the American and Asia Pacific regions, with the American business experiencing stronger demand following an improvement in the weather after a cold, wet summer.