Bottom Line: Fighting fitter

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The Independent Online
THE same day that Bimec, the engineering group, slipped away under the care of Roy Barber, the company doctor, another corporate hospital case showed itself to be fully recovered and fighting fit.

Havelock Europa, the shopfitter, has benefited from the administrations of Sir Lewis Robertson, the man also responsible for coaxing the hotel group Stakis back to health.

Havelock floated on the Unlisted Securities Market in the heady pre- Crash summer of 1987. But by 1989 it had parted company with its managing director, and by 1991 recession had pushed the firm into the red.

Sir Lewis left Havelock at the end of 1992, but before moving on he appointed Hew Balfour as chief executive, a key move as things have turned out.

Mr Balfour revived the company by slashing overheads. Between 1990 and 1993 the workforce fell from 1,100 to 600. Investment in timber processing equipment reduced Havelock's dependence on an army of highly skilled, but expensive, joiners.

Largely as a result of the cost cutting a loss before tax of pounds 3.1m in 1992 was turned into a pre-tax profit of pounds 2.3m last year. Havelock has also rejoined the dividend list, after a two-year absence, with a 2p payout. A prospective gross yield of 2.1 per cent, assuming a 50 per cent rise to 3p in 1994, is nothing to write home about, but further useful dividend growth can be expected in view of the high cover provided by earnings.

At 17 times prospective earnings the shares look relatively cheap in comparison with other recovery stocks in the building and contracting sector.

After an 11p rise to 177p yesterday investors can expect the shares to improve further. Shopfitting should benefit early as the economic cycle turns up because it is a relatively cheap item of capital investment for retailers who are looking to perk up their profile.

Demand should also rise as space hanging over from the last construction boom is gradually occupied.

Comfort can also be drawn from Havelock's client list, which includes Marks & Spencer, Boots, National Westminster Bank and Safeway.