Yule Catto profits expected to be ahead of expectations

Chief executive Adrian Whitfield said: "The company had a very good first half despite the difficult economic conditions. All three of our businesses delivered operating profits ahead of last year, and we now expect the results for the full year to be slightly ahead of the board's previous expectations." A profits improvement in the company's polymer chemicals division – which produces polymers used in surface coatings such as paint and varnish, adhesives such as wood glues and construction applications such as sealants and fillers; latex, which is used in the manufacture of carpet floor coverings and nitrile gloves; and speciality polymers to regulate PVC manufacture and sealants for the motor industry – was achieved despite a 15% fall in volumes. Yule Catto's pharma chemicals division – which produces ingredients for drugs used in the treatment of heart disease and ulcers – performed "a little below our expectations" but was still ahead of the previous year. Production was consolidated at manufacturing plants in Spain and Mexico with the transfer of products from Italy and Germany completed with the Italian plant having ceased production and is being closed down. William Blythe – the group's only remaining impact chemicals business (four of the original five Impact Chemicals businesses were sold in 2008) – was also ahead at the half year. Its UK manufacturing facility produces a range of inorganic specialities based on copper, iodine and tin and used in a applications such as semiconductor manufacture, pharmaceutical actives, non-toxic flame retardant, safety glass coatings and catalysts. Total sales for the half year decreased by 9.9% to £269.7 million (2008: £299.3m) while underlying pre-tax profit increased by 14% to £19.9 million (2008: £17.4m). The company also said it had made further progress on debt reduction and remained confident of achieving its target of net debt below £100 million before the end of 2010.