Bottom Line: Out of the fridge . . .
Tuesday 18 January 1994
Yesterday's news, of course, is not all that new. This time last year Dalepak warned that the devaluation of sterling, which forced meat prices sharply higher, would damage profits.
In the half year just passed, the cost of raw meat material increased by 11 per cent - most of which Dalepak was forced to swallow by the supermarkets. As a result, taxable profits for the six months to 31 October slumped from an already depressed pounds 1.6m to a paltry pounds 29,000.
The interim dividend has also been cut from 1.5p to 0.5p and is uncovered by earnings per share of 0.2p (9.3p).
If the full-year payment is slashed proportionately, the shares, down 6p yesterday at 139p, would yield 1.8 per cent. Hardly an encouraging investment proposition but Dalepak is battling back. Costs have been cut and the company says it is managing to make some selling prices stick.
This claim, at first sight hard to believe, is made more credible once it is appreciated that the price is held by keeping the pack prices the same but reducing the number of burgers in the pack.
It is pursuing product innovation and, following its success with vegetarian burgers, has high hopes for a tuna grill steak.
A price/earnings ratio for this year is more or less meaningless because profits are so tiny. More relevant but still quite optimistic forecasts of pounds 1.5m for 1995 mean the shares are trading on a multiple of 15 times earnings.
While that is not particularly demanding in relation to the market as a whole, the rating is some way ahead of the food manufacturing sector.
Yet Dalepak occupies one of the least attractive parts of this already hard-pressed stock market segment. In these circumstances the shares look too high and should be avoided while the full implications of the high-street 'food wars' are being digested.
- 1 End of the licence fee: BBC to back radical overhaul of how it is funded
- 2 This restaurant has misunderstood the concept of 'cheese and biscuits'
- 3 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face death penalty
- 4 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 5 PornHub turns masturbation into energy in bid to save the planet
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
End of the licence fee: BBC to back radical overhaul of how it is funded
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
iJobs Money & Business
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...