Laird Group, the auto components to building products and computer services outfit, caught most of the City on the hop with 1996 profits up rather than down, as many watchers had forecast. Laird looks set for a quieter 1997 and then profits bonanzas in the following two years.
That is the forecast of broker Merrill Lynch which expects profits to slip back this year, but then forge ahead in 1998-99 with earnings up 14% each year.
Brokers feared that a flat German market and heavy investment spending would take a toll on profits last year. But it was less than expected and pre-tax profits were up by just £500,000 at £66.6m – after allowing for losses of businesses no longer in the group.
Profits from continuing operations were up £2m to a record £69.2m. A strong performance from non-automotive interests contributed, for the first time, more than half the profits.
For this year, one of heavy capital spending and currency worries, Merrill trimmed its forecast by £800,000 to £69.1m. The boom the broker then expects will arise from the huge amount of new business from outside Germany. The broker forecasts £79.1m pre-tax for 1998 and £90.3m for 1999, with earnings per share rising from the 33.4p to 39.1p in 1998 and 44.6p in 1999.
Last year, the total from the divisions was up £3m at £74.3m. Sealing systems profits fell 18% at £21.2m, the company noting that 80% of these were earned outside Germany, once the main contributor. Industrial products and service industries made more profit. Merrill forecast divisional profits of £73.1m this year.
Laird’s $50m body-seal plant in North Carolina is its first investment of this kind in the US. Merrill reckons it will add up to £70m to group turnover in 1998-99.