Getting to grips at Brent

Chemicals group Brent International has spent most of the 1990s attempting and failing to recover from a hangover caused by over-expansion in the 1980s. Yesterday the new board, led by former finance director Keith Hutchings, signalled its intention to get to grips with the problems at last by slashing the interim dividend from 1.6p to just 0.6p. But the announcement sent the shares plunging 21p down to a recent low of 91p.

The bad news was compounded by disappointing half-way figures, showing pre-tax profits halved from pounds 4.01m to pounds 2.01m in the six months to June. There were mitigating circumstances, principally a pounds 1.02m charge for potential losses. A problem engineering contract caused most of the damage and Brent has provided for the potential costs of closing the entire operation.

But there was an uneven performance from the remaining two businesses. Reorganisation in the industrial division has paid off in a 17 per cent rise in operating profits, but costs remain too high in inks and coatings, where soaring raw material prices shaved pounds 300,000 from the operating total.

More clearly remains to be done. Restructuring cost pounds 372,000 in the first half and the company is warning of a further pounds 1.4m charge in the second. Brent is also grappling with gearing, which stood at 82 per cent in June. The sale of the small Asian operation and surplus properties should help, but investors should not hold their breath for an early restoration of the dividend. Meanwhile, underlying full-year profits of pounds 7m would put the shares on a prospective p/e in the high teens. High enough.