Bottom Line: Bag some Bensons

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The Independent Online
IMPROVING production efficiencies are underscoring a renewed atmosphere of optimism at Bensons Crisps. But it may be a little while before the full benefits come through.

In less than nine months last year it built a new factory as big as a football pitch near its established base at Kirkham in Lancashire.

Bensons, like most food manufacturers, has been tied down by the price war raging among supermarkets. But with good capital equipment Bensons should be better able to compete.

The new plant began production after the 30 November financial year end. The results show the strain of running with outdated equipment. Taxable profits fell to pounds 302,000 from pounds 500,000 and earnings per share from 5p to 4.1p. But the covered dividend was maintained at 2.85p.

Bensons may lose money in the current half as production capacity is swapped from the old to the new plant. Its debt - 80 per cent of net assets - is another worry, but there is compensation in the 5.4 per cent gross yield.

In 1995 profits of pounds 2m are achievable, putting the shares, down 4p at 66p yesterday, on a prospective multiple of seven times. Buy.