Final passed as Simon profits plunge by 71%
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Your support makes all the difference.SIMON ENGINEERING, which warned last month that its results for 1992 would be only half the market's expectations, has announced a 71 per cent drop in pre- tax profits from pounds 18.3m to pounds 5.3m. As expected, the final dividend was passed.
Roy Roberts, chairman, said: 'The extremely poor results for 1992 were due mainly to the deep recession that affected most of our markets. The widely held belief that conditions would improve during the year proved to be wrong.'
Cost overruns on a dollars 103m ( pounds 71.5m) contract to rebuild a paper mill in Florida accounted for pounds 8.3m of the downturn. The company had warned that the project would cost pounds 5m but also wrote off pounds 3.3m of profits booked in 1991.
The paper mill project caused a reversal in the process engineering division from a pounds 3.4m profit in 1991 to a pounds 3.6m loss last year.
Brian Kemp, chief executive, said that only in the US, where Simon makes a third of its sales, were there any signs of recovery. In the UK, a quarter of the business, there was no evidence that the recession was coming to an end. France and Germany were slipping further into recession.
The Access division, which supplies equipment such as mechanical ladders to the construction industry, firefighting services and utilities, also performed poorly last year. On unchanged turnover of pounds 135m, profits fell from pounds 5m to pounds 3.1m. In the division's peak year of 1989 profits were pounds 14.7m.
Industrial Services, which provides a range of services from port handling to geophysical surveys, boosted its sales through acquisition from pounds 100m to pounds 149m. Profits were hit by recession and cutbacks in spending by the oil industry, falling from pounds 16.1m to pounds 13.3m.
Simon continues to trim back its operations to match lower demand. Since the start of 1992, 1,000 redundancies have been announced and the environmental division, which had been flagged as one of the company's brightest arms, was sold earlier this year.
Group debt at the year-end, excluding the proceeds of disposals so far this year, increased by pounds 64m to pounds 101m, partly because of the sharp decline in the value of the pound against the dollar. Even with the cash from the environmental division sale, gearing is currently 65 per cent, up from 29 per cent at the end of 1991.
Group turnover fell 5 per cent to pounds 488m, earnings per share were 79 per cent lower at 2.6p and the passed final dividend leaves a full year total of 5p, down from 15.7p last time. Simon's shares, worth 400p in 1990, eased 2p to 111p.
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