Investment: Fairey finds the going tough
Tuesday 15 September 1998
FAIREY IS a classic example of a well-managed company that is been savaged by tough trading conditions. The electronic engineer is exposed to all three of the evils that have hammered manufacturers of late.
For a start, it is a big supplier of products to the semiconductor industry, whose output has been dramatically squeezed by overcapacity. It is also a sizeable exporter to Asia. To cap it all, the strength of the dollar and the pound reduces its profits on translation, while sales go to cheaper importers.
These three factors were highlighted in yesterday's interim results. Pre-tax profits fell 31 per cent to pounds 16.5m. The weakness among chip producers accounted for the bulk of the shortfall. Sales were also down as Asia and currencies took their toll. The shares took a predictable tumble and ended 16p down at a year's low of 245p.
The management is doing all the right things to combat this rout, reducing costs through increased outsourcing and greater efficiencies. Optimists also point out that the semiconductor market is highly cyclical and will rebound sharply in the medium term. Fairey's position as the market leader or runner-up in most of its businesses should also stand it in good stead when conditions improve in one or two years' time.
But until then it is difficult to see any upside for the shares. On a multiple of around 10
- 1 Michelle Rodriguez: Fast & Furious actor apologises after telling 'minorities' to stop taking on 'white' roles
- 2 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face the death penalty
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 Robert Mugabe eats a zoo for 'obscene' 91st birthday party
- 5 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...