13.02.2002

Baldwins warns of substantial reorganisation and lower profits

The London Stock Exchange reacted unfavourably to news from Baldwins that results for this financial year will be materially lower than expected. The company also warned that some cranes would be sold at a loss as part of a restructuring programme

The full text of the statement from Baldwins Industrial Services follows:

“Baldwins Industrial Services announces that the group’s results for the year ending 31 March 2002 will be materially below current market expectations.

“This is owing to a combination of continuing disappointing trading in the UK, increased operating costs in North America and expenses associated with reorganising the group and its funding facilities.

“Trading of Delta, Load tite and M&E Handling Services divisions has been in line with forecasts.

“Turnover in the UK crane division is likely to be lower than the Board’s prior expectation owing to a further deterioration of utilisation levels against forecast.

“Due to the high fixed cost nature of the business, this will lead to a significant reduction of the division’s profitability.

“Whilst turnover in North America is materially the same as previously forecast, higher direct labour costs than expected have resulted in lower earnings.

“The group will also incur substantial losses in the year in relation to a number of one-off items.

“In addition to the loss of £1.0 million previously reported arising from the failure of the Independent Insurance Group, these will include restructuring costs both in the US and UK and professional fees borne in relation to the reorganisation of the group’s funding arrangements.

“It is also likely that a number of non-performing cranes will be sold at a loss as part of the restructuring programme.

“The scale of the loss will depend upon the number cranes to be sold, which is still subject to discussion with group’s funders.

“Discussions with the group’s bankers and major providers of asset finance are progressing satisfactorily.

“As part of this process the board is conducting a detailed strategic review of the group’s operations which as indicated in the interim results announcement made on 21 December 2001, is focusing upon ensuring the group’s scale of operation and cost base, in both the UK and North America, is commensurate with the market opportunity and achieving an adequate financial return