Dalgety profits second warning
PRESSURES in the agriculture sector have contributed to the second profits warning in the space of two months from Dalgety.
The year to June 30 is now expected to show a pre-tax profit of just £65m before exceptionals, compared with £85m predicted in May, and over £100m achieved last year, on a like-for-like basis.
But exceptional charges, relating to restructuring of the animal feed and petfood divisions plus accounting adjustments, have been revised up from £36m to £138m. As such, Dalgety is now expected to announce a £73m loss instead of a £49m profit in its year-end accounts.
"In agriculture, plans to implement the rationalisation outlined in May (including closure of several feed mills after a 30% drop in sales due to BSE) are well in hand," says the firm. "But trading conditions have worsened in the final quarter of the year. The performance of the arable supply business has been below earlier expectations, due mainly to availability of low-priced imported fertilisers and chemicals and the wettest June ever recorded in the UK.
"Pig breeding company PIC has continued to perform well, though the continued strength of sterling will adversely affect 1997 profits."
While management continues to look for ways of reorganising the groups business, it is the petfoods division that faces the greatest shakeup, including £62m for reorganisation and cost reduction and £5m for BSE-related write-downs in stock values.
Dalgety chairman, Sir Denys Henderson, described the situation as "unacceptable", as share values took another dive. *