Acquisitions on the menu as profits flow at Unigate
The Investment Column
Tuesday 11 June 1996
The sale of the 29 per cent stake in Nutricia in December for a net gain of pounds 212m has transformed the company's balance sheet leaving net cash of pounds 170m. Since the year-end, the troublesome Black Eyed Pea chain of US restaurants have been sold, requiring a total provision of pounds 59.5m. The Taco Bueno chain will be off-loaded this year leaving Unigate concentrated on two main businesses, fresh foods and distribution.
With the funds likely to be used for an acquisition rather than a share buy-back, the market wasted no time trying to second-guess a possible target. Shares in Geest, shorn of its troublesome banana business, stormed 20p ahead. Dairy Crest, the foods group that is coming to the market valued at pounds 274m, would be an easily digestible bite. There is a hint that a European deal could also be on the cards as Unigate has named its recently acquired French business St Ivel Europe, even though it only includes the French division. The City would prefer a food deal, but an acquisition to bolster the Wincanton logistics business is also possible, with Tibbett & Britten a candidate.
Acquisition talk meant Unigate's results took something of a backseat. Profits jumped from pounds 58m to pounds 299m in the year to March though this was largely due to profits on disposals including the Nutricia stake and the Giltspur exhibitions business. At the operating level, profits rose 12.2 per cent to pounds 114m. As expected, profits in the dairies business fell from pounds 38m to pounds 35m. Door-step sales of milk fell 16 per cent during the year but the fall is slowing. Milk supply to the supermarkets remains under pressure as the grocers squeeze supplier margins. Chief executive Ross Buckland is still angry about Milk Marque's price rises and supports inquiries that could see the situation corrected.
European Foods had a good year boosted by the first full-year contribution from the French businesses. Malton, the UK's largest supplier of bacon, ham and pork, also performed well, though the benefit from the beef scare will be felt in the current year's profits. Wincanton Logistics, the distribution division, added new customers and has invested in new automated warehouse.
Analysts are sticking with a profits forecast of pounds 126m. With the shares up 8p to 417p, that puts Unigate' stock on a forward rating of just over 10. This is a discount to the sector which would make the shares look cheap if Mr Buckland pulls off a decent deal. With little down-side the shares are worth a look.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 3 Why I'm on the brink of burning my Israeli passport
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 The true Gaza back-story that the Israelis aren’t telling this week
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber pass £170,000 on eBay
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Gaza-Israel conflict: The terrible price Palestinian children are paying for Israel’s war with Hamas
Rotten egg smell could help battle heart disease and Alzheimer's
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...