In a surprise move, James Crean the food, packaging and electrical company, is to seek shareholder approval to float off its print and packaging division into a separate listed company, PPCO.
Executive chairman, Mr Ray McLoughlin, told The Irish Times he believed that the market value of the two companies will be higher than Crean's existing market value. The stock market which rose 2.6 per cent yesterday did not show much enthusiasm for either the proposals or the yesterday's set of disappointing interim results; Crean's shares first fell 5p to 105p and then recovered 5p, finish unchanged at 110p.
Asked if he had sounded out the institutional shareholders, he said there has been a "positive reaction". Asked if any institution was opposed, he said "not that I know of", adding that not all institutions had been contacted. The hiving off is expected to be completed before the end of the year. When it is completed, Crean shareholders will have a holding in two publicly quoted companies; Crean which will consist of the group's US based food division (around 90 per cent of profits), and the electrical division, and in PPCO.
Crean said the development of this plan has been underway for some time. It will be subject to approval from various regulatory authorities.
Crean group profit before tax fell from £3.35 million to £3.08 million in the six months ended June 30th 1998. Executive chairman, Mr Ray McLoughlin, said the best indicator of the underlying results is the 11 per cent increase in operating profit from continuing operations from £10.28 million to £11.39 million.
However, the results had the benefit of around 11 per cent from currency translations which if excluded would indicate nil growth. Basic earnings per share fell from 3.1p to 2.7p. The interim dividend is being cut from 6.5p to 2.35p, in line with the group's policy to reduce dividend payments.
Sales from continuing operations went up from by 9 per cent from £116.8 million to £127.7 million. A breakdown shows growth in all areas with the exception of electrical which suffered from a contraction. The largest division, food, saw a rise in sales from £53.5 million to £58.8 million and a 16 per cent rise in operating profit from £5.09 million to £5.90 million. It had the benefit of a dollar translation which if excluded would bring the underlying growth down to 5 per cent. Lower sales in the frozen meals business was compensated for by positive factors in the poultry business.
Sales in print and packaging rose from £28.9 million to £35.1 million while operating profit grew by 12.5 per cent from £4.4 million to £4.97 million. If currency translation benefits are excluded, the growth was just marginal. The results, said Mr McLoughlin, reflect good underlying performances in the printing and packaging companies "bearing in mind increasingly difficult economic conditions in the UK". However, the results from the division's labels business were "disappointing due to difficulties in the division's UK based labels business".
Sales in the electrical division fell from £34.4 million to £33.8 million while operating profit fell from £0.79 million to £0.52 million. On concerns over his dual chairman and chief executive role, he said the board will review this position when the print and packaging division is hived off as a separately quoted company.
