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BLUECHIP : The bad days may be over as BTR bites the bullet

Several developments at BTR last week kept the market guessing about the future direction of the industrial holdings conglomerate. It announced preliminary figures for 1996 which, as flagged by new chief executive Ian Strachan, showed a cut in the dividend to 9.6p for the year, down from 14.7p. But the shares rose 7p to 259.5p before a final spurt on Friday lifted them to 276p. BTR warrants rose to 26.75p, from 17.5p, which made them among the best-performing securities on the market.

Also intriguing was the final bowing-out of the BTR old guard with the departure of Alan Jackson, the former managing director. Two new, and it has to be said, independent non-executive directors were also appointed. Simon Robertson, who resigned from Kleinwort Benson after disagreements with its German parent, Dresdner, is joined by Alain Gomez, who retired last year as chairman and chief executive of French defence group Thomson- CSF after rowing with the Paris government over an alliance with General Electric.

Pre-tax profits may have been down 13.4 per cent, to pounds 1.26bn, but what excited dealers was the glimmer of a turnaround. Mr Strachan has said he will dispose of businesses with combined sales of pounds 2.3bn. Around pounds 1.75bn of this target has already been achieved - which explained the pounds 247m fall in sales to pounds 9.53bn - with 25 more smaller companies to go. Growth in specialist engineering, building products and polymers helped offset some of the sales loss.

After a disastrous spell during which it has been one of the worst-performing shares in its sector, BTR is picking up steam. With the dividend cut, it has freed up cash for investment. Some poor performers have gone, and more are set to join them. Mr Strachan still faces a huge task in refashioning the group, but there are signs he can do it.

The shares continue to trade at a 25 per cent discount to the market, so there seems little downside from here. BTR is a buy, with the proviso that it may be up to three years before the promised land is finally reached.