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Berisford sees return to profit

The re-shaping of Berisford, the former commodities group, has progressed a fair distance since Alan Bowkett took control in 1992, though it has not been without setbacks.

The old commodities businesses such as British Sugar have long gone. Other peripheral interests such Eurotrailer, a rentals operation, were disposed of last year for a total of pounds 24m. Still to go are the agribusiness division and some properties that are being smartened up for sale.

Berisford now has two legs: its Magnet kitchens and joinery division, which was bought nearly two years ago, and the American catering equipment business, Welbilt, which was acquired earlier this year.

Given the problems in the housing market and the string of dire announcements that have come from other DIY and building materials companies, the market was braced for bad news yesterday. Berisford shares plunged 15 per cent in June following a Magnet-induced profits warning.

In fact, the outcome was better than feared, pushing the shares up 17p to 190p. Pre-tax profits for the year to September were pounds 26.9m after last year' pounds 3.2m loss. It is Berisford's first full-year profit for five years.

Though operating in tough conditions, Magnet is performing creditably. Its profits increased from pounds 6.2m to pounds 10.2m though there has been some sacrifice in the margin over the second half. Costs have been cut via job losses and a factory closure. But pounds 12m has been invested in a new distribution fleet and refurbished showrooms.

Welbilt turned in pounds 28m in its first period and looks a good deal. Welbilt is hoping to ride on the back of the fast-food expansion world-wide.

With pounds 111m net cash Berisford can easily fund expansion. Targets are likely to be smaller building supplies businesses whose products can be sold through Magnet's 200 outlets. At Welbilt the moves are likely to be into related areas such as a commercial dishwasher manufacturer.

With profits of pounds 37m forecast this year, the shares stand on a forward rating of less than 12. Attractive.