£70m US pensions blow for BOC

THE legal clouds hanging over industrial gases group BOC darkened as it revealed its US pension fund faced a claim potentially worth nearly £70m.

The news comes on top of a multi-million pound legal action in the American courts from former welders who claim that manganese fumes led to them developing Parkinson's disease.

BOC shares slipped 12p to 840p, the biggest faller among the FTSE 100 blue-chips.

The pension claim - former staff say their pension payouts were miscalculated - will be heard in Illinois next Friday. If the action is successful, any award will be paid out of US pension assets and will be charged to the group's profit and loss account.

The welding fume action will involve about 150 cases in the US concerning 9,700 individuals. These include a single case recently filed in West Virginia state court, which is claiming on behalf of more than 3,700 claimants.

BOC says its will 'continues to defend itself vigorously' against the claims. It has purchased 'significant' amounts of liability insurance.

It has not manufactured welding rods in the US since 1986, although it does sell them made by other manufacturers. The British-based company believes there is no scientific evidence to support any of the claims, some of which have already been thrown out by the courts.

BOC also faces a claim in the Texas courts over Fluorogas, which it is appealing.

BOC's pre-tax profit climbed 15% to £395.1m at constant exchange rates for the year ended September. Fourth-quarter operating profit fell to £131.9m from £133.9m a year earlier. BOC blamed US problems. It said the dollar's weakening would lead to a £7m hit in 2004.

The troubled BOC Edwards division was still making less operating profit than a year ago with turnover in the fourth quarter down by 7%.

However, its business in China was improving. There were signs during September and October that orders from the semiconductor industry were improving 'although the benefits will not show through in profit before the end of 2003', said chief executive Tony Isaac. In the medium term, BOC Edwards was in a very strong position to benefit from renewed investment in semi-conductors as well as the growth of flat panel display manufacturing.

The group has benefited from strong cashflow that has led it to reduce net borrowings since March 2003.The recovery in share markets has led to a £9m improvement in the company's net pension credit.