Howden sees no light in tunnels:The Investment Column

Howden's latest half-year figures showed the engineer drilling itself into a hole once again. A poor performance in the tunnelling equipment division left the group struggling to raise profits in the six months to October, with the pre-tax total just edging ahead from pounds 11m to pounds 11.1m, boosted by lower interest costs.

The news will give long-term investors a sense of deja vu. In the early 1990s, results at the Renfrew-based company took a dive when it hit massive compensation claims after supplying equipment to dig the Store Baelt tunnel in Denmark.

This time it seems to have been just an unaccustomed dearth of business, a comparison which is made worse by a big order last year for the new Hong Kong airport. Profits slumped from pounds 2.39m last time to a loss of pounds 710,000 this.

The company sees signs of a pick-up and the October award of a pounds 35m contract to build two boring machines for the Qinling rail tunnel in China gives tangible backing to that confidence. In all, orders are up 35 per cent in the division.

It is a similar story in the dominant air and gas handling equipment operation. Business wins from the Fuzhow power station in China to the tunnel ventilation fan for the Heathrow Express rail link helped push orders up 10 per cent and a 4 per cent rise in turnover translated into profits up 14 per cent to pounds 11.6m.

As easily the world's biggest maker of industrial fans, Howden is cashing in on healthy markets in the Far East and South Africa.

Europe remains reasonable and self-help in the flat US power market helped pull the Howden Fan Company there back into the black in the second quarter, although there was a loss for the period as a whole.

Orders currently stand 17 per cent up at pounds 284m and the only major cloud is the effect on translation of a stronger pound.

Profits of around pounds 33m would put the shares, up 2.5p at 70.5p, on an undemanding forward multiple of nine. Unexciting even so.