Profit warning hits Qualceram share price

SHARES in Qualceram Shires tumbled by 13% yesterday after the bathroom and ceramics manufacturer issued a profit warning.

Higher manufacturing and transport costs were starting to bite and would take €1.25 million off the bottom line, the Arklow-based company said in a trading update.

Qualceram, which made pre-tax profits of €3.5m last year after losses of €11.6m in 2002, said higher oil prices had fed through to transport costs while margins were also hit by higher utility charges. “We have not been able to pass these costs on in selling prices,” the company said.

Sales in Britain, which accounted for more than half of total revenues, were “softer” in the current year, thanks to a weaker housing market that resulted in reduced demand for new bathrooms. The company was also forced to slash prices in Britain to cope with increased competition from cheap imports from the Far East.

“While total group turnover has been only slightly affected, the combination of these market factors has impacted margins, with the result that the outcome for the full year is likely to fall short of current market expectations,” the company said.

But chief executive John O’Loughlin remained upbeat and said the group’s overall position was “stronger than a year ago”, in spite of the negatives.

The company will soon get a cash injection of €4m from the sale of a 14-acre site in Britain, which it plans to use to slash its debt pile and reduce ongoing interest costs. It will also look for other ways to improve efficiency and make its manufacturing base more competitive.

Results for the full year to December will be announced on March 14.