Interbulk cuts cost of debt but says forecasts will be hit by Euro recession

CHEMICALS distribution firm Interbulk, in which engineering tycoon Jim McColl holds a stake, has warned that profits will fall short of expectations this year despite completing a deal that cuts the cost of its debt.

The East Kilbride-headquartered business said the European recession had impacted trading at its division dealing with bulk liquids.

It said: “Volatility in the supply chain has remained high and provides daily operational and fleet management challenges.”

The weak euro was a further drag on profits, it said. The group said revenue for the year to 30 September was expected to be “slightly below market expectations”, while profit before tax is expected to be similar to the previous year, which will also disappoint investors.

The warning comes despite Interbulk having grown profits at the half-year stage, and a continued recovery of its dry goods arm. The firm has also used a £17.4 million cash injection from Chinese peer Sinotrans, which bought a 35 per stake in Interbulk last year, to pay off half of an expensive “mezzanine” debt with Bank of Scotland.

Yesterday it reported details of a new £77m package of loans and overdrafts with the same banker, to run for four years. The deal is designed to save the firm around £1.5m a year in interest rate payments.

Chief executive Koert van Wissen said last year’s Chinese deal would help restore growth. “Our network in Asia has been significantly enhanced by our alliance with Sinotrans in China and this will be increasingly important in the next 12 months,” he said.