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Interbulk shares and profits down

LOGISTICS specialist Interbulk has seen its shares slide by 5% after warning profits and revenue will be lower in the first half of its financial year.

SAVINGS: Profts at Interbulk, of which Jim McColl is a non-executive director, are on the slide,  leading to the likely loss of 18 jobs.
SAVINGS: Profts at Interbulk, of which Jim McColl is a non-executive director, are on the slide, leading to the likely loss of 18 jobs.

The East Kilbride company, of which Jim McColl is a non-executive director and has a near 3.6% stake in, said its dry-bulk division had been hit by weakness in European plastics markets across most of its customer base.

As a result the company is shedding around 18 jobs, the majority of which are at its operations in Hull, which is likely to save around £900,000 annually.

The dry-bulk arm mainly distributes large containers of plastic pellets for the chemical industry which are then used in making packaging and bottles, as well as in the construction sector.

Finance director Scott Cunningham said the liquid-bulk division had seen revenues increase in the six months to the end of March this year, while profits would be at a similar level to the previous financial year.

Although the dry-bulk arm remains profitable Mr Cunningham conceded profits and revenue there would not match the 2013 numbers.

He said: "The biggest issue has been the balance of activity and the utilisation level.

"Where we are doing a piece of business from A to B, then if that switches off we need to adjust the B to C part."

Interbulk said it had made £3.6m of loan repayments in the period which would help to cut its interest bill and offset some of the operating profit shortfall.

Mr Cunningham indicated trading in the second quarter of the year had shown an improvement and that had continued in recent weeks.

However, he outlined that Interbulk was focused on self-help measures, such as cutting costs and improving procurement methods, to improve performance rather than relying on trading conditions improving.

He said: "We are certainly seeing on the global side in terms of our tank containers improved utilisation. We are very focused on internal initiatives so we are not pinning our hopes on pick-up in the market."

Mr Cunningham said the business was not yet seeing any tangible impact from the unrest in Ukraine but was monitoring the situation.

AIM-listed Interbulk said its annual profits are still expected to be in line with market expectations.

House broker Westhouse Securities retained its buy recommendation and 7.8p target price on the shares.

Kevin Fogarty, at Westhouse, said: "Management state that they expect full-year profit before tax to be broadly in line with expectations, based on an improved operating performance during the second half of this financial year."

Shares in Interbulk, which is 35% owned by Chinese logistics firm Sinotrans, closed down 0.25p at 4.62p.

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