Boosey & Hawkes fails to lift gloom

Shares in Boosey & Hawkes plunged a further 37.5p yesterday, despite a strong set of first-half figures.

Boosey & Hawkes yesterday said that rising costs associated with takeover talks at its main shareholder Carl Fischer had cost the group pounds 570,000 in the last six months.

Boosey & Hawkes' share price under Richard Holland, chief executive, has fluctuated wildly amid growing speculation about its future.

US based Carl Fischer, which owns a 43 per cent share in Boosey & Hawkes, decided to put up its stake for sale earlier this year. Under UK takeover rules, whoever buys Fischer's stake must put in an offer for the whole of Boosey's. But it was revealed last week that the offers Fischer had been receiving for Boosey were ``materially below'' the current share price.

All the big names in the music industry are thought to have been eyeing up Boosey including Polygram, EMI and Sony. They are likely to be interested in Boosey's music publishing business, but analysts are expressing doubts about the future of its instrument manufacturing business. Though Boosey may be able to exploit synergies from their publishing and instrument manufacturing divisions, it is not at all clear whether a out and out music publisher such as EMI would be able to do so.

Boosey announced first-half operating profits of pounds 3.4m yesterday, up from pounds 2.8m in the same period last year. Sales were also up by 4 per cent, despite being held back by a pounds 3.8m currency hit. Yet profits before tax fell by 14 per cent, after costs relating to sterling's strength and the possible sale of Carl Fischer's 43 per cent stake in the company. Without these costs, pre tax profits would have risen by 13 per cent. Shares closed at 787.5p, 37.5p down on yesterday, and 26 per cent lower than August's peak.

Boosey's underlying figures are strong. Instrument manufacture and publishing, Boosey's two main divisions, both improved on last year, despite the effect of the rising pound.

The instrument division saw a mammoth 75 per cent jump in operating profits this half, up to pounds 2.66m. Almost half of this increase came from reed makers Rico, considerably exceeding management expectations. Boosey and Hawkes acquired US based Rico International in September 1996 for pounds 18m.

Overseas, instrument sales were up in Germany, but down in Japan. The downturn in Japanese sales was attributed to ``the continuing weakness'' of the Japanese economy.

Before consideration of special costs, operating profits in publishing were marginally up on the same period last year. However, a combination of German restructuring costs and the strong pound helped to knock operating profits after special costs down to pounds 1.51m.