Bottom Line: Harrisons pigs out

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Leaving pigs out of it for the moment, there were plenty of hopeful signs in Harrisons & Crosfield's results to show what the company will be capable of when its timber and chemicals operations get into full swing.

Bill Turcan, finance director and soon to be chief executive, is refreshingly critical of his company's performance in certain areas. Profits at Harcros timber and building supplies in the UK were, for example, up by 47 per cent to pounds 15.9m on a 7.4 per cent volume gain, but lower gross margins cost pounds 5.1m in lost profit.

Profits gearing to volume is as strong in chemicals where profits also jumped by an underlying 30 per cent to pounds 40m with additional help from past cost-cutting. Of major strategic moves, on top of the disposal of its Australian interests, there was no news yesterday.

Mr Turcan implied that its US builders merchanting side, whose poor market position and low returns look at odds with the rest of the portfolio, will be worked on. There seems no rush to get rid of Indonesian palm oil plantations as prices could firm up after a mystifying fall in the second half.

The company even supplied details of favourable mortality rates and feed conversion ratios in BOCM Pauls' pig-breeding operation to emphasise its underlying high efficiency. But pigs, whose pounds 7m turnround to losses of pounds 3.5m held group pre-tax profits down to pounds 98m in 1993, remain inherently volatile although a recent rise in prices has brought the activity back to break-even.

Timber and chemcials have entered 1994 with a spring in their step. Gearing to volume gains will probably lift pre-tax profits to pounds 135m this year and Smith New Court expects pounds 190m in 1995. By then the 9p dividend, uncovered in 1993 after an pounds 8.5m ACT write- off, will be covered twice and ready for a fresh advance.

A current yield of 5.4 per cent at 207p and a p/e falling from 17 prospective to 11.5 look attractive.