Dairy Crest has still not peaked
Antisoma's drugs can give it new life; Business Post offers first class prospects
Thursday 13 November 2003
Investors have been milking Dairy Crest since this column advised people to buy its shares in the summer. They lapped up the food group's move away from the volatile commodity end of the dairy market and into branded products, such as posh spreads and yoghurts.
Tasty interim figures yesterday show spreads now powering most of the group's profits. Clover and Utterly Butterly led the charge, growing volumes by 15 per cent between them. The group hopes to work the same magic with the re-launch of St Ivel Gold and Vitalite, acquired a year ago.
The rest of its branded businesses, which contribute 55 per cent of group profits, are also strong. Frijj milkshakes grew by 19 per cent, while Cathedral City cheddar was up 11 per cent, with new diced and sliced formats to thank for the rise. Yoplait yoghurts added 36 per cent to their volumes. Overall, the group's interim profits before tax rose 40 per cent to £9.1m.
Meanwhile, someone seems to have been nibbling their way through the country's cheese mountain, because Dairy Crest said cheddar prices were improving from recent historic lows. Whether this means farmers can look forward to better prices for the liquid milk they supply to make cheese - a bone of major contention - remains unclear. Dairy Crest is adamant that it won't yield to their demands for an extra 2p per litre. That is clearly not good for struggling dairy farmers, but it is good news for profit margins at Dairy Crest. Drummond Hall, the chief executive, says 60 per cent of the farmers he deals with have now agreed to accept a rise of 1.4p per litre, with only the stubborn milk co-operatives holding out for more.
Although milk remains as low a margin business as ever, the merger between Express Dairies and Arla should pave the way for Dairy Crest to pick up some business from supermarkets looking to reduce their dependency on the merged company. The shares, down 2.75p to 484.25p, should have further to go.
Antisoma's drugs can give it new life
Antisoma was the first share tipped in this column in 2003, and the biotech minnow has performed for us. At 46p, it is up 55 per cent thanks to investors' renewed appetite for risky companies and its own progress with work on four novel cancer drugs.
Yesterday's quarterly figures showed the company has £31.2m in the kitty, about two years' worth of cash assuming it ramps up trials of promising early-stage drugs. Antisoma also has a rich sugar daddy in the shape of Roche, the Swiss pharmaceuticals giant, which will bankroll the final stages of human trials and the marketing of Antisoma's potential blockbuster drugs in return for 80 per cent of the takings. As a quasi-research and development arm of Roche, Antisoma is less risky than some in the biotech sector.
But risks abound and there is a "binary event" coming up in the spring. Binary in the sense that the outcome is either "1" (its ovarian cancer drug works) or "0" (it doesn't). Savvy analysts say Antisoma shares could double if the drug, R1549, is successful, halve if it is not. Given the probability of success, it is reckoned to be about 65 per cent, that looks a gamble worth taking.
And behind R1549, another couple of interesting drugs, including a pill that looks like it can kill cells in the middle of a tumour, which will soon be tested in conjunction with chemotherapy. Interesting.
Business Post offers first class prospects
Business Post, the little express delivery group, is set to break into the Royal Mail's postal monopoly as early as next April. The company plans to pick up, sort and transport mail from large companies with lots of post, but can only take them as far as a local Royal Mail office. The regulator, Postcomm, is set to rule before the end of the year on the exact figure Business Post must pay for access to the Royal Mail's "last mile" army of postmen and women. The state-owned group is likely to get up to 11.5p per letter for delivering on behalf of private companies.
Slough-based Business Post believes it can take 3 per cent of the £5.3bn annual postal market from Royal Mail. That is an extra £150m turnover, doubling the size of the business in three years. If that's not exciting enough, there are hopes that further deregulation will enable individual letter-writers to use Business Post letterboxes in supermarkets by the end of the decade.
So the future looks all right. Meanwhile, Business Post increased turnover by 23 per cent to £89.4m in the six months to 30 September, as it acquired new businesses and expanded its parcels operations from business deliveries into consumer packages. Pre-tax profits were up 13 per cent to £8m.
The fast-growing new and future ventures justify the share price of 486p, a multiple of 25 times next year's forecast earnings. One to tuck away.
- 1 Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
- 2 JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
- 3 The West has it totally wrong on Lee Kuan Yew
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Jeremy Clarkson calls on trolls to leave producer Oisin Tymon alone: 'None of this is his fault'
Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
Andreas Lubitz: Who is Germanwings co-pilot who 'locked out captain and crashed flight 9525'?
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Russia unveils plans for high speed railway and superhighway to connect Europe and America
Cate Blanchett loses temper during interview: 'That's your f**king question?'
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Andreas Guenter Lubitz intentionally crashed flight 9525 into the Alps in act of mass murder and suicide – latest
iJobs Money & Business
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...
£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...
£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...
£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...