Bottom Line: Spring Ram needs new door men

PRACTICALLY the only positive thing to say about Spring Ram, the now infamous Yorkshire-based building materials company, is that the shares are still trading so it is still possible for investors to bale out.

Eighteen months ago Spring Ram was one of the stock market's favourites. Despite making kitchens and bathrooms and inhabiting a section of the economy that felt the worst of the recession, it continued to report better and better results. At the height of the company's popularity the shares hit 180p. Three profit warnings and eight months later they have hit a low of 46p.

A disparaging piece of research from the stockbroker Smith New Court, published earlier this week, added to the gloom. Smith's research was particularly damaging because in March (after only two profit warnings) it was a supporter.

Natwest Securities contributed to the debate yesterday with a positive note. Angus Phaure, the author, believes the shares will outperform but even he concedes that 'the group has next to no credibility'.

While coming to different conclusions, both he and Kevin Cammack of Smith suggest that unless things improve Regency Doors, Spring Ram's new door making venture, should be closed.

The basis for the third profits warning, delivered two weeks ago, was that greater than expected start-up losses were being incurred at Regency Doors and Artisan Tile. For Regency the difficulties do not stop there: the market for doors is extremely tough.

It is a tempting knee-jerk reaction to suggest that Spring Ram should throw in the towel on Regency. In reality the company has to try again to make its investment - perhaps pounds 25m- pounds 30m - work.

Ron Farr is the main board director responsible for 'special products', which includes Regency alongside Artisan Tile and sundry property transactions. He must accept blame for Regency but sacking him will not, in itself, provide the answer. Spring Ram needs to recruit experienced additional management for Regency, qualified in both production techniques and marketing of doors. Unless it does, the group may as well say goodbye to Mr Farr and Regency Doors.

But recruiting will not be easy. Spring Ram has been looking for a new finance director since March. Stephen Lister, the top numbers man at the cosmetics and hosiery company Peter Black, is the latest name in the frame. But he remains to be convinced. So do shareholders.

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