Problems in the Whessoe pipeline send shares down

(First Edition)

WHESSOE dismayed the stock market yesterday with a warning of trading problems in its piping systems division and the probability of a loss this year.

The directors, who held the company's interim dividend at 2.3p in May, added that it was unlikely to pay a final in the year to September.

The shares, which peaked in April 1993 at 352p, tumbled a further 26p to 108p.

The news was the latest in a line of disappointments. At the interim stage, earnings were slashed to almost a third of their level the previous year, and profits plunged from pounds 4m to pounds 1.8m as the company warned of difficult conditions.

Whessoe said its trading position had worsened since May and it was clear that second-half results would fall short of those achieved at the interim stage.

The board, which is planning 'significant exceptional provisions' relating to action taken in response to market conditions, expects a full-year loss. In the year to September 1993, Whessoe saw profits fall for the first time in four years. They dropped 11 per cent on 1992's figure to pounds 7.14m.

Whessoe plans cutbacks in its piping systems division, which the board blames for most of its problems. It said the principal reason for the deterioration in trading was delays by customers over contracts, unsuitable product mix and lack of orders.

The instrumentation division, which the company hopes will progressively provide sales and earnings to substitute for the ailing piping systems division, was said to be 'performing profitably in testing market conditions'.

Non-core businesses of Autronica, the Norwegian instrumentation company bought last year for pounds 21.8m, will be sold.

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