KEY POINTS:
Guinness Peat Group is reporting a 185 per cent increase in half-year net profit to £94 million ($273.7 million).
Chairman Sir Ron Brierley said from London today the main component of the increase, from £33m in the previous corresponding six months, was the sale of Australian Wealth Management
shares.
While the sale was at a lesser value than the level at December 31, it was considered timely to exit, with GPG having completed its role in the creation of a credible independent funds management company, he said.
Revenue for the six months to June 30 was down 3 per cent to £657 million, from the six months to the end of June 2006. No interim dividend was declared.
Sir Ron said a useful contribution came from subsidiary Coats, a manufacturer and supplier of industrial sewing and embroidery threads.
For the half-year Coats made a net profit of US$24.7 million ($35.9 million), compared to $23.1 million in the previous corresponding six months.
Coats' revenue was US$820.7m, up from US$806.7m.
Sir Ron said Coats had achieved the progress which had been hoped for and anticipated by this stage, with the exception of an unwelcome downturn in key crafts markets.
But Coats' crafts division was a structurally mature, well established business and future expectations were firmly based on a return to better conditions.
"Overall, Coats should record further momentum for the full year and beyond, as it gradually moves from transition to an acceptable return on capital invested."
To the extent Coats has met expectations, Australian aluminium product manufacturer and distributor Capral Aluminium had not.
"That is doubly disappointing for GPG because we believe the company has done everything right in terms of modernisation of manufacturing processes, upgraded customer service and streamlined distribution channels," Sir Ron said.
The impact of a high aluminium price, Chinese imports and a depressed housing market in New South Wales was a powerful combination to overcome.
Sir Ron said an interesting second half was unfolding with increased market volatility and the probability of a more severe correction to "blue sky" values in the foreseeable future.
Despite that, the board looked forward to presenting a positive result for the full year.
GPG shares closed at $1.90 yesterday, having ranged between $1.75 and $2.37 in the past year.
- NZPA