Qualceram posts €3.5m profit for 2003

BATHROOM ceramics manufacturer Qualceram Shires showed signs it had put an end to a difficult period last year as it returned to profitability and resumed dividend payments.

But revenues from the key British market tumbled by 13% as the company suffered from weaker sterling and increased competition from low-cost imports.

Overall turnover fell 5% to €95 million during the year as improved sales in Ireland and other markets helped offset the decline in Britain, which accounted for 52% of total revenues. Qualceram recorded pre-tax profits of €3.5m, an impressive turnaround after an €11.6m loss in 2002.

Chief executive John O’Loughlin said profits fell from €1.5m to €1.2m when the effects of exceptional items were stripped out. Mr O’Loughlin added that “improved foundations were laid during 2003 which are expected to result in improved performance and cashflow”.

The company completed a restructuring programme during the year that cut its net debt from more than €50m to €19m. The reduced debt burden halved interest costs and added €2.5m to the profit line.

The company generated cash to pay off debts by selling a number of group properties that it subsequently leased back from their new owners.

Qualceram also completed the closure of the Hanley plant in Stoke-on-Trent in Britain during the year and said it would raise up to €6m from sale of the site.

Qualceram’s debt problems date back to its 2000 acquisition of British ceramics group Shires, about five times the size of Qualceram at the time.

Shareholders were given a pleasant surprise by the decision to resume dividend payments after they were suspended last year. Chairman Peter Addison said the company recognised the importance of maintaining a progressive dividend policy and would pay a dividend of 5.25c per share. Qualceram shares were unchanged at €1.75 at close yesterday.