Anglo-Canadian steel processor Precoat International is set next Tuesday to reveal half-year profits down #1.5m from #1.8m after a tough year for the steel sector.
Finance director and chartered accountant John Rider and fellow directors are now due to take the London Stock Exchange listed company private with a management buy-out to stem heavy stock market under-performance.
The move follows a spate of old economy companies on both sides of the Atlantic opting to go private in the face of a volatile markets and investor disinterest.
Last November the group released a profit warning with earnings expected to fall short of last year’s #3.4m, and admitted life as a public company had not been a success.
Difficulties at the steel processor come as Corus, the recently merged British Steel – Koninklijke Hoogovens conglomerate, considers the future of thousands of jobs at two of the UK steel industry’s main plants at Llanwern outside Newport and Redcar in the north of England.
Last month joint chief executive John Bryant, the former head of British Steel, and his Dutch counterpart, Fokko Van Duyne, resigned from the newly formed steelmaker after axing 4,500 jobs last year to tackle a 20% cut in UK demand for steel in five years.
Despite industry wide setbacks, Precoat pushed through with expansion plans in the pre-coated steel supply market with the #4.8m takeover of Cardiff-based company Europressings.
Chairman Ian Williams in November said a number of underlying trends had switched from negative to positive, and that underlying sales volumes rose 6% through the period.
Sales slipped from #32.6m to #31.8m because prices were lower than a year ago, and pre-tax profits were accordingly lower at #1.77m, from #1.96m.
Chairman Ian Williams is leading the management buy-out bid and a team of independent directors has been set up to look into the move under the chairmanship of senior non-executive director David Waterstone.
‘While the board remains positive about the long term prospects of the company, it is concerned this will not be reflected in the share price,’ Williams stated.
‘The board has therefore asked the company’s financial advisers SG Hambros to review the strategic options which might be available to maximise shareholder value including a management buy-out.’
At the agm in September, the board had forewarned shareholders that ‘the pressure on margins continues to increase’.
– For more on the company see www.precoatinternational.co.uk
Pre-tax profit: #3.43m
Normal earnings per share: 15.6p
Dividend per share: 6.9p
Market capitalisation: #16.3m
Ian Williams, chairman, appointed Sept 1978
John Rider, CA, FD, appointed July 97
John Forster, FCA, company secretary, appointed Jan 1995
Auditor: BDO Stoy Hayward
Listed on the LSE in 1995, Precoat International operates steel service centres processing and selling precoated steel products in the UK and Canada, with 80% of the group’s sales in Europe through Color Steels Ltd and Strat-Color (Coated Steels).
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