Warning from Allied Colloids

A warning from Allied Colloids that profits could be hit by the current strength of the pound yesterday took the shine off the group's first results since the record $390m (pounds 233m) purchase of the CPS Chemical Company of New Jersey last year. The shares slipped 1.5p to 128.5p, but remain above the 118p terms of December's cash call.

Announcing a 30 per cent rise in profits to pounds 54.6m for the 12 months to March, David Farrar, chief executive, said the recent significant changes in exchange rates would have hit profits by pounds 5m had they applied throughout the year. He warned that "clearly [they] will have a negative impact on profit in the current year".

However, he forecast exchange rate effects would not affect the company's competitive position and said he was "pleased" with the performance of CPS since January and the progress in realising synergies. CPS chipped in pounds 3.9m profits to these figures. The original operations saw gross margins rise from 36 to 39 per cent on reduced raw material costs, improved manufacturing efficiency and stable sales prices. The group warned raw material costs would increase again, led by propylene-based products.