Trading Statement

Yule Catto & Co PLC
27 October 2000


Trading Update

On 31 August 2000 we reported in our interim statement that high raw material
prices would overshadow near term trading conditions and confirmed that the
weakness of the euro against sterling was having an adverse translation effect
on overseas profits.  In addition a serious explosion at a critical raw
material supplier had severely limited production at our fine chemicals
facility in Holland, but the supplier had anticipated that normal operations
would recommence during the third quarter.

As we have entered the last three months of the year, it is appropriate to
provide an update on the three areas previously highlighted:

1.  Rather than see the rise in raw materials abate or stabilise for our
    polymer businesses as anticipated, fourth quarter input costs are set to
    increase to unprecedented levels supported by the continuing strength of
    the price of oil.  In the short term the rate of cost increases continues
    to exceed the improvement in our selling prices, resulting in a further
    squeeze on margins during the remainder of the year.  There remains strong
    demand across many of our market sectors, and there are signs of an
    industry wide push to restore margins which will see this trend reverse in
    the medium term. We are sustaining the investment to reposition our
    operations into more technically demanding applications where we have
    identified exciting growth opportunities.

2.  More than 60% of our group profit before taxation originates in countries
    within the euro zone and our businesses continue to perform well as
    measured in local currency.  However, with the highly publicised further
    weakening of the euro, the exchange rates used for the consolidation of
    euro dominated results is likely to be 10% lower than the e1.52/£ rate
    appropriate for 1999.

3.  The resumption of normal raw material supply to our Dutch facility will
    take longer than originally indicated by our supplier due to stringent
    safety requirements imposed by the US authorities.  It is unlikely,
    therefore, that normal production will commence until the end of the year,
    creating a negative impact on our profit in 2000 of around £4m.

    Working with our customers through a carefully managed allocation
    procedure has minimised the long term impact and we look forward to a
    recovery of profitability in 2001.

As a consequence of the above, it is possible that the profit before taxation
for 2000 could be 25% short of current market expectations.  Action is also
being initiated to put in place major restructuring to deal with loss making
operations that could result in a charge against 2000 results of up to £25
million principally to cover the write down of assets.  These changes should
be largely cash neutral.

Looking forward, we are confident that the underlying prospects for the group
remain strong as the benefits of repositioning and current investments in
growth areas flow through.


27 October 2000


For further information, please contact:

Mr Alex Walker, Chief Executive       01279 442791
Mr Sean Cummins, Finance Director     01279 442791