Margin gains offset slumping volumes at Yule Catto

Volumes took a dive in the fourth quarter at Yule Catto but the market was reassured that the chemicals group is still on track to deliver 2011 results in line with expectations.

Having seen modest declines in volumes in the third quarter, the rate of year-on-year decline accelerated in the fourth quarter to the "mid-teens". The company had previously attributed the easing off in orders to de-stocking. Happily, the Harlow based company said the declines have been offset by margin management.

The year end net debt figure is expected to be "comfortably" below £200m on the back of the sale of the pharma division and lower working capital requirements.

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The board expects the acquisition of PolymerLatex to add some £14m of profit in 2012 compared to 2011.

The full year results will be announced on March 14.

Yule's share price has dropped 11% in the past 12 months, but response to Wednesday's trading update was positive, with the shares rising 2.4p to 179.8p in early trading.

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