COURTAULDS Textiles has again managed to maintain its underlying

earnings position depite a further deterioration in trading conditions.

Since the original demerger three years ago, conditions have gradually

got worse, yet through cost-cutting and rationalisation it has held its

own. Much of the credit for this must go to Martin Taylor, the

ex-journalist brought in by Sir Christopher Hogg as chief executive. Now

it is proposed that he become chairman as well, though a combined chief

executive and chairman goes against the current trend and is counter to

the Cadbury Committee's views.

Pre-tax profits jumped from #20.7m to #39.1m for 1992 but this largely

reflected the elimination of previous loss-makers. Profit before

interest for the continuing activities was 7% off at #42.9m.

Disposals, strong cashflow and the release of pension fund money have

further reduced borrowings, cutting interest charges sharply again, from

#11.1m to #6.6m. This, along with a lower tax charge, resulted in a 4%

rise in continuing earnings per share.

The group is confident enough to pay a higher final dividend of 9.2p

to make a total 4.6% higher at 13.6p.

Courtaulds Textiles has seen its competitive position substantially

improved following sterling's devaluation. A recovering US economy

should help the North American business and the main cloud on the

horizon is the deepening European recession.

The weak dollar for much of last year was a major problem in making

Far Eastern producers even more competitive because local currencies are

invariably tied to the dollar.

Fabrics trading profit was down 14% at #22.1m largely due to

difficulties in the US lace business. The UK side performed strongly,

helped by developments in fleece and stretch fabrics and by

manufacturing improvements. Arab head shawl material is another area

singled out as doing well.

Own-label clothing held profit at #10.9m though sales were down 7.5%,

mostly in childrenswear, socks and knitwear, reflecting lower demand and

planned withdrawal from low-margin products.

Marks & Spencer is the largest customer and sales to it were slightly

lower. The division has been widely restructured. Branded clothing, such

as Gossard lingerie and Aristoc hosiery, increased profit, boosted by a

surge in demand for Wonderbra. Aristoc has embarked on a #7m spending

programme.