Good news at last from Fisher

THE INVESTMENT COLUMN

Albert Fisher has brought few good tidings in recent years but yesterday's results finally had the look of better news about them. Stripping out exceptionals of pounds 8m relating to losses on three disposals, pre-tax profits for the year to August, up 15 per cent to pounds 39.5m, gave some cause for optimism.

Management, led by chief executive Stephen Walls, is now sounding pretty bullish and investors must hope that three years of restructuring and under-performance is about to turn into a phase of sustained growth.

Albert Fisher certainly needs one after a period of drift during which the shares have fallen a long way from their most recent peak of 130p in 1991. Yesterday they finished 1.5p lower at 53p.

Like most food groups, Fisher has been subjected to the twin squeeze of the powerful supermarkets and rising raw material costs. It has responded by moving away from commodity products towards added-value ranges in an attempt to protect itself from the worst of the pinch.

Commodity products now account for 35 per cent of group sales compared with 65 per cent three years ago and Mr Walls expects that figure to fall steadily. The hope is that Albert Fisher will become less prone to natural disasters such as the hurricanes and floods that have regularly pulled the rug from underneath the company.

Added-value items such as prepared meals and sauces represent 20 per cent of the American division, though it is a moot point whether washing and chopping lettuce before putting it in a bag really qualifies. Certainly the US was the star performer last year, with profits jumping from pounds 6.4m to pounds 16.9m. But this was flattered by strong lettuce prices, which added around $2m to the profit figures.

The seafood sector was more disappointing but the division is now under new management and a recovery is expected this year. There should also be further growth in the sauces and dressings business, where a new factory is being built to cope with additional demand from customers like McDonalds, Sainsbury and Waitrose.

Mr Walls says Fisher is now down to its core businesses and no further disposals are expected. In-fill acquisitions are, however, on the agenda.

Management must now fulfil the upbeat promises it has made and although the shares offer a good yield, the company is still relatively exposed to commodity areas. BZW is forecasting profits of pounds 42m for the current year, putting the shares on a forward rating of 12. About right.

Mowlem move

shrugged off

The market has become so blase about the travails of the construction sector, and especially of J Mowlem, one of its more troubled constituents, that it pretty much shrugged off the departure yesterday of the company's chief executive, John Marshall. The shares lost just 3p to 58p, although that puts them within a whisker of their recent low, hit in August 1992, and means they have lost almost 90 per cent of their value since they peaked in 1989.

After the announcement a month ago that the company had plunged into a pounds 31.8m loss, mainly thanks to the heavy costs of refocusing itself on a profitable core, it was perhaps no surprise that senior heads would roll. Ken Minton, chairman since the summer, has clear views about where he should take Mowlem and his ideas plainly did not chime with Mr Marshall's. His replacement is the group's construction head, who will have an intimate knowledge of one of the four areas the company has decided to focus on.

Whether the shares, after their recent dismal performance, are worth looking at again is hard to say. On the positive side, Mr Minton's strategy seems to make sense - stripping out the businesses, such as London City Airport, which cannot pay their way, reducing overheads to match the low level of business available and focusing on activities where a decent return is achievable.

But following the worse-than-expected red ink in September, analysts have become a great deal more circumspect about their forecasts and, even after the recent fall, the shares do not appear unduly cheap on earnings grounds.

Smith New Court has pencilled in profits of pounds 4.5m for the current year to December, disregarding the exceptional restructuring write-off that smashed a hole in first-half figures and will do so again at the full- year stage. Next year, pounds 8.5m could be achievable, implying earnings per share of 4.1p and a prospective price/earnings ratio of 14.

That is hardly compelling, especially as the shares, on the basis of a promised 2p final dividend, yield only 4.3 per cent, close to the market average. Given all the uncertainty, the shares are unlikely to reverse recent weakness.

New radio group

tunes in to AIM

Independent Radio is giving a shot in the arm to the fledgling Alternative Investment Market by raising pounds 9.7m in a mainly institutional placing. It is a large sum for a start-up, representing almost double the next biggest cash raising on AIM and nearly a quarter of the pounds 40.3m total garnered in new cash by the market to date. But Independent's executive management, led by Michael Connolly, has a strong track record in the business, having successfully turned round the Preston-based Trans World Communications radio group before selling it last year to EMAP for pounds 71m.

The money now being raised by Independent represents seed-corn finance for a predatory venture hoping to scoop up small radio stations which have won licences to operate in the north of England. The group has identified 30 such outfits which may be willing to sell out, particularly where initial investors backed start-ups to take advantage of the Business Expansion Scheme tax breaks and are now looking for a way out.

Prices vary, but for a typical outlay of pounds 1m, Mr Connolly thinks they can secure an audience of up to 800,000 a time. The second strand of the strategy is to attempt to win the licences for Yorkshire and East Midlands, the two largest franchises to be allocated by the Radio Authority next year. Success would involve expenditure on studios and other infrastructure and the intention would be to return to shareholders for the cash.

The potential is undoubtedly there, given the rapid growth in commercial radio advertising. The strength of Independent's management gives it a decent chance to exploit that potential, as yesterday's 17p closing premium to the 100p placing price recognises. But given the risks with any start- up, the shares should not be chased.

PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
CSKA Moscow celebrate after equalising with a late penalty
football

Arts and Entertainment
music
Life and Style
Designer Oscar de la Renta takes a bow after showing his Spring 2015 collection in September, his last show before his death
fashionThe passing of the legendary designer has left a vacancy: couturier to America’s royalty, says fashion editor Alexander Fury
Life and Style
tech

Company reveals $542m investment in start-up building 'a rocket ship for the mind'

News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
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

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Let's talk about loss

We need to talk about loss

Secrecy and silence surround stillbirth
Will there be an all-female mission to Mars?

Will there be an all-female mission to Mars?

Women may be better suited to space travel than men are
Oscar Pistorius sentencing: The athlete's wealth and notoriety have provoked a long overdue debate on South African prisons

'They poured water on, then electrified me...'

If Oscar Pistorius is sent to jail, his experience will not be that of other inmates
James Wharton: The former Guard now fighting discrimination against gay soldiers

The former Guard now fighting discrimination against gay soldiers

Life after the Army has brought new battles for the LGBT activist James Wharton
Ebola in the US: Panic over the virus threatens to infect President Obama's midterms

Panic over Ebola threatens to infect the midterms

Just one person has died, yet November's elections may be affected by what Republicans call 'Obama's Katrina', says Rupert Cornwell
Premier League coaches join the RSC to swap the tricks of their trades

Darling, you were fabulous! But offside...

Premier League coaches are joining the RSC to learn acting skills, and in turn they will teach its actors to play football. Nick Clark finds out why
How to dress with authority: Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear

How to dress with authority

Kirsty Wark and Camila Batmanghelidjh discuss the changing role of fashion in women's workwear
New book on Joy Division's Ian Curtis sheds new light on the life of the late singer

New book on Ian Curtis sheds fresh light on the life of the late singer

'Joy Division were making art... Ian was for real' says author Jon Savage
Sean Harris: A rare interview with British acting's secret weapon

Sean Harris: A rare interview with British acting's secret weapon

The Bafta-winner talks Hollywood, being branded a psycho, and how Barbra Streisand is his true inspiration
Tim Minchin, interview: The musician, comedian and world's favourite ginger is on scorching form

Tim Minchin interview

For a no-holds-barred comedian who is scathing about woolly thinking and oppressive religiosity, he is surprisingly gentle in person
Boris Johnson's boozing won't win the puritan vote

Boris's boozing won't win the puritan vote

Many of us Brits still disapprove of conspicuous consumption – it's the way we were raised, says DJ Taylor
Ash frontman Tim Wheeler reveals how he came to terms with his father's dementia

Tim Wheeler: Alzheimer's, memories and my dad

Wheeler's dad suffered from Alzheimer's for three years. When he died, there was only one way the Ash frontman knew how to respond: with a heartfelt solo album