FOR the second time in the space of six months, the engineering group Unidare has issued a profits warning, and has stated that operating -profits for the year will be below current market expectations. Current profit forecasts of around £7.5 million are likely to be scaled downwards following the profits warning.
Yesterday, Unidare also confirmed the sale of its plastics division in Ireland and the UK to a management group backed by Hambros Northern Ireland Ventures for -£5.3 million sterling.
This disposal - first reported in The Irish Times last Monday - is the final step in a disposal programme which has seen Unidare sell £18 million worth of businesses and property in the past 18 months. A further £2 million disposal of land in Enfield, north London, is expected to be completed soon.
Unidare shares dealt at 195p yesterday, but the next move for the shares in expected to be sharply downwards, with offers at 190p and few bids above 170p. The company's broker, NCB, was quoting a bid price of 170p for the shares although Davy was quoting a bid-offer of a 150p-19Op.
At the beginning of the year, the shares were trading at 300p but since the first profits warning in March, it has all been downhill.
The past six months has been a dismal period for Unidare. In March, the company shocked the market when it sounded a profits warning at its annual general meeting, a warning that had the effect of knocking 50p off the value of the shares. In June, Unidare reported poor half-year profits that were below even the revised forecasts.
Yesterday's profits warning is the latest shock to the market and the group's shareholders, which include Mr Dermot Desmond's IIU which has built up a 8.3 per cent in Unidare over the past six months. IIU is, however, currently showing a substantial paper loss on its investment. However, in a move aimed at showing their confidence that the situation can be turned around, the Unidare board has decided to maintain the dividend for the 1995/96
financial year. "This is a tangible signal that we do have confidence in the future," commented Unidare's chief executive, Mr Paul Duggan.
Commenting on the latest profits warnings, Mr Duggan said that when the first profits warning was sounded last March, the group had expected a better second half performance from its welding operations in the US and UK. "We saw a situation where welding sales in the second half grew, but not by as much as we expected," said Mr Duggan.
He added that Unidare's competitors in the welding products industry were experiencing the same sort of difficulties, and added: "We are confident we can manage our way through these difficulties."
Following the sale of the plastics division and the forthcoming sale of the property in north London, Unidare will have net cash of around £7 million. The company had said that it could handle an acquisition of up to £20 million and would prefer to look at acquisitions which can generate operating profits of at least £1 million.
