Bottom Line: Albert Fisher's tough task

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STEPHEN WALLS, executive chairman of Albert Fisher, is working hard to persuade investors that the company has changed. No longer will acquisitions be made for the sake of it; they must help the group achieve a dominant market position. No longer will its collection of businesses be run as individual fiefdoms; they have to be integrated and rationalised.

The City has been sufficiently convinced to send the shares up from 37.5p a year ago to a high of 80p. But yesterday's results gave it pause, and the shares were marked down 5p to 75p as it became clear how hard Mr Walls's task will be.

Headline pre-tax profits rose from pounds 25.9m to pounds 31.5m, but that was due to a halving of losses on disposals. Profits from continuing businesses dropped 9 per cent to pounds 49.5m, despite a pounds 2.5m contribution from acquisitions and an estimated pounds 1.5m currency benefit.

The worst damage was in Europe, where the group suffers most from its reliance on unpredictable commodities such as cockles and apples. Profits from produce dipped pounds 1.1m to pounds 6.4m, despite a pounds 2m boost from the acquisition of Hunter Saphir. The food processing business was hit by everything from a glut of apples to the decline of state fruit concentrate manufacturers in Eastern Europe, and profits fell almost a quarter to pounds 21.5m.

If Mr Walls achieves his market share ambitions, it will give the group more clout with suppliers and customers but it will not insulate it from the vagaries of the fresh produce market. In the US, where it is the largest processor and distributor to the food service sector, price pressures meant profits grew only marginally.

This year it also has the headache of the pounds 48m redemption of its preference shares. Even after the pounds 20m expected from the flotation of Charles Sidney, gearing will rise from 22 to 36 per cent, although it will enhance earnings. Analysts are forecasting pounds 52m and a dividend again maintained at 3.75p. That puts the shares on a multiple of 13.4p. The 6.25 per cent yield is needed to compensate for the risk.