Diversified products work for Laird

The Investment Column

Laird's formula in recent years has been to reduce its dependence on the auto industry, while maintaining investment levels in its three business legs centred around sealing systems, security hardware and computer boxes. And while it looks dangerously like a conglomerate, the record shows the strategy has worked.

Headline pre-tax profits only crept ahead by pounds 500,000 to pounds 66.6m in the year to December and even they were flattered by acquisitions made in the last two years - principally the Cego window hardware operation - which together chipped in an additional pounds 2.7m. But the bald figures hid some decent levels of growth. After a disappointing first quarter, business picked up from the end of March and profits rose 18 per cent in the second half.

Non-automotive operations led the way. Under a quarter of the business five years ago, these now represent over half the turnover after a very respectable growth rate of 25 per cent last year. The specialist packaging to Fullarton computer boxes division raised profits by 23 per cent to pounds 21.7m after a record year. And even if growth in the computer industry slowed, Fullarton is prospering as its big customers Compaq and IBM outsource more value-added assembly to suppliers.

Industrial products, which saw profits grow from pounds 27.6m to pounds 31.4m, was boosted by acquisitions and as one of the leading security products suppliers in the UK should benefit from the building upturn.

But the main story at Laird is still car-related. Sealing systems, one of the biggest suppliers of weather seals to the European auto industry, was hit by pounds 1.8m start-up costs for its new plant in North Carolina and competitive conditions in Germany. Profits slumped pounds 4.9m to pounds 21.2m as a result.

The figures demonstrated the importance of new models, both for manufacturers and suppliers. Laird was dragged down by the relatively poorly performing Volkswagen Golf and General Motors Astra in 1996, while further start- up costs of perhaps double last year will make 1997 unexciting, but next year may prove more interesting.

Volumes from North Carolina will start building from the first quarter and Laird will be gearing up production for a slew of new car launches in 1998 and beyond, including a GM model, the new Escort, the new VW Beetle "concept model" and a BMW to be produced in North Carolina.

Currency will knock at least pounds 5m off the bottom line at these levels, but Albert E Sharp thinks profits of pounds 73m this year will rise to pounds 83m next. That puts the shares, up 44.5p to 389p yesterday, on a forward p/e of 11, dropping to 10. Reasonable value.

Dagenham Motors ahead

No surprise about Dagenham Motors' figures yesterday. The company put out a statement in February warning analysts that they had taken too gloomy a view after disastrous half-year figures and pointing to full- year profits about the same as last year's pounds 5.1m.

In fact, Dagenham just beat 1995's result with pounds 5.12m pre-tax after a 9 per cent increase in turnover to pounds 291.9m. After a higher tax charge, earnings per share slipped a touch to 13.6p (14.4p) and a same again 5.5p made for an unchanged full-year dividend of 7.7p.

Dagenham has been through a turbulent time as its main franchise, Ford, lost market share and cost-cutting failed to keep pace. All that changed in the second half, with a 5 per cent reduction in the company's headcount and other efficiency savings leading to a strong final quarter.

So far this year, trading appears to have improved, with sales of new cars boosted by the introduction at the end of 1996 of the distinctive little Ka and the Explorer 4x4 models. For the ninth year in a row, Ford took the top three places in the best-sellers list with its Escort, Fiesta and Mondeo.

Used cars performed well with profits rising by 13 per cent and exceeding the return from new cars for the first time, while sales and profits from new commercial vehicles rose substantially.

The biggest boost for Dagenham, however, has come from Ford's decision to focus on fewer, larger dealerships and to unwind its archaic rules forbidding ownership of adjacent sales territories. The real beneficiaries from this will be the larger players like Dagenham with a strong relationship with the manufacturer.

On the basis of forecast profits this year of pounds 5.5m, the shares trade on a prospective p/e ratio of 7 and there is plenty of support from a yield of almost 10 per cent. Dagenham has had its problems but this seems quite an anomaly. Buy.

United Assurance targets costs

United Assurance Group, the product of last year's merger of Refuge Assurance and United Friendly, made an exceptional net profit of pounds 386m before tax out of the merger last year, but the profit on continuing activities was pounds 194m compared with combined profits of pounds 164m for the two partners in 1995. Most of the money came from long-term investment returns and transfers. General business was marginally profitable at best.

Shareholders get an 18p-a-share dividend, 35 per cent more than in 1995, but including exceptional losses on discontinued business earnings per share only rose from 36p to 36.1p. and new business premiums improved by a bare 2 per cent. The merger presents an opportunity and a challenge to shake off a lack-lustre image.

Group chief executive George Mack and finance director Bill McDonald have lost no time in drawing up plans to close half the branches, making a third of the staff redundant, before the end of the year.

The next step is to cut costs and increase sales per head to compete with the new wave of policies backed by heavy advertising and sold over the telephone.

The traditional market has been among families with below average incomes. It is a huge market with an urgent need for more financial products, but one where individual policies tend to be small and the costs of selling and servicing them are above average, especially as Mr Mack insists that United will continue to offer advice on the suitability of its products. New products and new methods are promised in 1998. The shares rose 12p to 486p, but for the investor it is a leap of faith.

Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreEXCLUSIVE The Shakespeare play that proved too much for more than 100 people
News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Arts and Entertainment
booksThe best children's books for this summer
PROMOTED VIDEO
Sport
Colombia's James Rodriguez celebrates one of his goals during the FIFA World Cup 2014 round of 16 match between Colombia and Uruguay at the Estadio do Maracana in Rio de Janeiro, Brazil
sportColombian World Cup star completes £63m move to Spain
News
news
News
i100
News
people
Sport
Antoine Griezmann has started two of France’s four games so far
sport
Life and Style
techYahoo Japan launches service to delete your files and email your relatives when you die
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
News
i100
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
life
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor