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Universal Salvage vows to replace Direct Line scrap

Universal Salvage has suffered a major blow with the loss of its lucrative Direct Line contract, causing its share price to plummet by more than 50 per cent. In a trading update, the car disposal specialist said its contract with Direct Line will end on June 30, 2002.

The deal accounts for about 50,000 vehicles - 40 per cent of the 125,000 cars it scraps every year. After the announcement, Universal Salvage shares dived by 55.13 per cent to 215p - the previous year low was 461p.

“We're confident of replacing the business over the next six to nine months,” says Universal Salvage. The firm hopes to announce profits of £7.2m for the year to April 27, 2002 before exceptional charges of £665,000 relating to cost reduction measures and an abortive site acquisition in Scotland. Last year, pre-tax profits were £6.6m.

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