Investment: Rouble trouble for Bemrose

LIKE MOST smaller companies in unpopular sectors, Bemrose Corporation has had a tough few months. Shares in the printing and promotional goods group have fallen from 468.5p in March to just 313.5p, down another 12p yesterday. In the past year the stock has underperformed the market by 14 per cent.

Apart from general market woes, Bemrose has suffered from its contract to print tickets for the Russian lottery. Demand for the game is still strong, but Bemrose has been forced to change the price of the tickets twice due to the collapsing Russian currency, first from six roubles a ticket to 10 and then to 20. This disrupted production and increased costs. Although the contract only accounts for a small amount of Bemrose turnover there is the possibility of a dent to profits if the Russian position deteriorates further.

Another disappointment has been the effect of the coming millennium on the company's diary products, such as its Charles Letts range. Bemrose had hoped that consumers keen on ticking off the days to the year 2000 would cause a nice rise in demand in 1998. So far that hasn't happened, although the company is confident the growth will come through next year.

The promotional products business is more important. This is growing quickly and should enjoy a millennial lift as companies bombard clients with products such as Year 2000 stamped pens.

On full-year profit forecasts of pounds 26m the shares trade on a forward multiple of just seven and yield more than 5 per cent. Although negative sentiment could take a while to shift, that is cheap for a decent business.