Higher expenses, interest charges and the write-off of exceptional items hurt the bottom line.
Operating profits excluding exceptionals were flat at 20.2 million. The firm, whose biggest shareholder is chairman Paul Coulson, paid out 2.3 million to cancel outstanding share options. Its interest bill increased by 2 million to 12.6 million as net debt soared 21% to 265m. Mr Coulson said the increased debt was down to a share buyback programme that cost 30m and high capital expenditure of 27m.
Results were affected by plant downtime that was caused by rebuilding work on one of the main furnaces at its Rockware subsidiary, which cost the business more than 2m. Rising energy prices had no effect on profitability, due to Ardaghs decision to put in place a hedging policy to protect it from price rises. But Mr Coulson warned shareholders that this cover was about to run out and that higher energy costs would hit profits in the second half of the year.
The company was also hit with a 4.4m tax charge, bringing its total tax bill to 7m and wiping out profits. The extra charge arose from a change in British tax law that meant tax breaks associated with a sale-and-leaseback property deal were no longer available.
Mr Coulson had more bad news when he said the company would face greater competition from the middle of 2005, when a glass plant owned by Fermanagh businessman Sean Quinn is scheduled to begin operations. The new plant, which will be located near Chester on the England/Wales border, will be capable of producing 20% of total demand in Britain for glass.