Investment Column: Staveley still has a lot to do

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The Independent Online
IT HAS been a grim year for investors in Staveley Industries, the troubled engineering and minerals group. After a profits warning in March which led to angry noises from 12 per cent shareholder Guinness Peat and the departure of chief executive Roy Hitchens, the shares slumped from almost 200p to 118p.

There was a small 8.5p jump in the shares to 119p yesterday as the City got to meet new chief executive Chris Woodmark for the first time since he joined from Rolls-Royce Motors. After the year's pounds 74m loss he is undertaking a strategic review but insists no further disposals are planned following the pounds 44m sale of Weigh-Tronix and Cronos Richardson.

He is concentrating on cost-cutting and improving the appalling performance of Staveley's businesses. Only the salt business makes decent money and profits there collapsed last year. The other three divisions contributed just pounds 100,000 between them last year on sales of pounds 250m. The Integra services division made a loss. Mr Woodwark plans to cut costs, flatten the management structure, merge branches and concentrate on more profitable contracts. But much still needs to be done.

On Deutsche Kleinwort Benson's current year forecast of pounds 16.5m the shares trade on a lowly forward p/e ratio of 11. The downside now seems limited so the shares may be worth a punt.