Bottom Line: A long journey

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The Independent Online
THE radical overhaul of Bridon, from a commodity group to specialised steel and wire rope maker, has been a long time coming. But questions remain over whether even a pounds 25m restructuring is enough to combat fierce international competition in its key markets, and a 4p rise in the share price to 160p on yesterday's news may prove to be a false dawn.

Recovery is going to be very slow. One big problem outside Bridon's control is how to adjust prices amid rising raw material costs. And Far Eastern producers have a head start in the form of low labour costs and can hold prices far more easily.

Trading conditions globally will also remain tough in the short term, with little sign yet of a pick-up in infrastructure spending.

Bridon, though, is sensibly changing its approach to the market by aiming to profit from value-added products and by concentrating on the customer's needs in favour of rigid product and geographical structures.

And fortunately for Bridon its management has kept a tight rein on costs and balance sheet. So much so that the pounds 25m restructuring programme has not had to involve a messy refinancing and the company can promise an unchanged final dividend of 2.75p.

With no improvement in trading conditions since the interim stage, Bridon will probably show a pre-tax loss of pounds 22m for 1993, after breaking even before exceptional items in the second half.

A 3.1 per cent yield looks enough to support the shares until the substantial planned cost savings begin to generate returns from its pounds 350m-plus turnover.