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.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music
News
i100
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
tv
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
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

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum