Bottom Line: How L&B is making a pile
Tuesday 12 July 1994
'Rather than piling it high and selling it cheap,' he said, 'we like to pile it low and sell it expensive.'
Profit margins, in other words, are of central importance. It is not a startlingly novel strategy, but it is working.
In the half-year to May, L&B pushed pre-tax profits ahead by 42 per cent to pounds 20.4m. More than half the rise was due to acquisitions, but another boost came from improved operating profit margins which widened from 9.5 to 10.8 per cent.
L&B is known best for its packaging interests: it makes the boxes for Kellogg's Cornflakes and the wrapping for Cadbury's chocolate.
But its two subsidiary operations - moulding plastics and producing specialist materials such as synthetic sports turf - earn the best margins.
L&B makes a 9 per cent return on sales in packaging but 12.5 per cent on plastics and nearly 16 per cent on specialist materials.
Profits growth was helped by acquisitions but the underlying increase was still an impressive 17 per cent.
Earnings per share, despite a 15 per cent rise in the number of shares in issue, advanced 33 per cent to 13.6p.
L&B is not without problems. Recession on the Continent is depressing performance and there are signs of raw material price increases.
But, despite the difficulties, L&B should manage taxable profits of pounds 40m in the full year, putting the shares on a prospective price/ earnings ratio of 15.5 at 403p, up 16p to a near-record high.
That is a premium to the market as a whole but at a discount to the paper and packaging sector. The dividend yield is in line with the market average with good scope for growth. Buy.
Actress sees off speculation about her appearance in an amazing way
Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat
- 1 Renee Zellweger on plastic surgery reports: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 2 Salisbury ranked seventh-best city in the world to visit in Lonely Planet’s Best in Travel 2015
- 3 Disney announces new female-led film Moana
- 4 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 5 Russell Brand threatened with arrest after filming outside Fox News headquarters
Australian jihadist Abdullah Elmir vows Isis will fight 'until black flag is on the top of Buckingham Palace'
Renee Zellweger on plastic surgery reports: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
Chicago voter tells Obama 'don't touch my girlfriend' – Obama stays super smooth
Oscar Pistorius: The brutal prison life that awaits disgraced athlete
Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
Of course, teenage girls need role models – but not like beauty vlogger Zoella
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...