Lupus flogs Gall Thomson, as profits fall

published 13 March 2012

Door and window component maker, Lupus, has announced a 75m pound sale of its Gall Thomson subsidiary while also revealing a big drop in 2011 profits.

The sale of Gall Thomson, an oil services provider, will allow Lupus to reduce debt by £30m, to 0.7 times earnings before interest tax depreciation and amortisation (EBITDA).

Observers might conclude that this has come at just the right time because group sales during 2011 fell 9% to £230.4m. The underlying operating margin also worsened to 9.7% versus 10.3% in the prior year.

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Lupus blames these declines on challenging construction markets in the UK and the US.

As a result of the disposal the dividend has been boosted by 75% to 3.5p per share.

The firm's Chief Executive, Jamie Pike, explained the logic of the sale "on favourable terms" as allowing Lupus to focus on its core business, saying: "the disposal...marks the completion of the refocusing of Lupus as a supplier of components to the door and window industry worldwide.

"The group now has significant financial flexibility to achieve its strategic goals and to accelerate the development of the building products division."

Investors seemed to buy the argument, with Lupus gaining 9.7% by 11:17. The stock is still 4.5% down over the last 12 months.