Bottom Line: Turcan digs into plantations

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The Independent Online
BILL TURCAN, who takes over as chief executive of Harrisons & Crosfield next May, seems set to make an early mark.

He is warning that the plantations-to-chemicals conglomerate's recent decision to withdraw from Australia will be followed by similar shake-ups elsewhere of its far- flung portfolio.

With trading picking up across the board, he is well placed to accelerate the last eight years' transformation of a sleepy plantation owner.

Analysts think a likely early move will be the flotation of part of Harrison's Indonesian plantations, although rising palm oil prices and crop yields might mean the company waits a while to maximise the proceeds of any sale.

Another strong possibility is that, having failed to get a decent return from its investment in Moore's, the American builders merchant, the company will decide to concentrate its resources on Harcros, the UK timber merchant.

With only a regional presence, Moore's is always likely to remain a peripheral player compared with Harcros, which has national coverage. Re-investing the proceeds at home would also ease the company's ACT problem, which could cause a write-off of pounds 8m this year.

Mr Turcan insists he is happy with the broad spread of businesses across four main divisions. Plantations provide useful cash flow in good times, even if the quality of their earnings is debatable. Builders' merchants and chemicals will benefit from a cyclical upturn.

Less clear are the attractions of animal feed, a flat market where profit growth depends on cost cutting and increasing market share through acquisition. In the meantime, the shares offer a high and safe enough income to compensate for a rating that looks out of kilter with still-hesitant markets. On the basis of a 9p dividend, which this year will be just covered by earnings for the first time in three years, the shares yield 6.7 per cent at the current 186p. That makes them interesting at this stage in the cycle.

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