The group is undergoing a metamorphosis under chief executive Bill Turcan, who is doing his best to put an end to a disappointing period in which the company has slipped on several banana skins. Past problems have included pigs, animal feeds, dog food and chemicals. Almost every division, in fact.
More change is to follow. Mr Turcan has already offloaded the forestry products business. Yesterday he announced plans to sell or float off the plantations division which produces palm oil. This will sever the company's last links with its trading past dating back to the nineteenth century. The plan is to concentrate on two main divisions: chemicals and building products. Acquisitions are expected, although the company has nothing in its sights.
That leaves the pet food and animal feeds divisions in limbo and hints at eventual demerger when the company is stripped down to two divisions with nothing in common. Mr Turcan would not say as much yesterday but he confirmed that management was not frightened to change the structure of the company.
In its current form, the company has turned in a mixed performance. Profits last year were down from pounds 236m in 1994 to pounds 124m last year, although the 1994 figure was boosted by pounds 130m of disposals. Operating profits, the more meaningful figure, were 20 per cent higher at pounds 130m. Of the divisions, the chemicals business increased profits by 26 per cent to pounds 50m boosted by higher output and increased productivity. Palm oil doubled profits due to higher prices but will fall this year as the price subsides.
The problem area was timber and building supplies, where profits slumped by a third. Harcros started the year well but then slid downhill in a difficult market. The outlook here is grim, with the UK business in particular reliant on a pick-up in the housing market.
After the slump in the shares two years ago, there has been some recovery this year but the future remains clouded until the new structure emerges. Panmure Gordon has downgraded its profit forecast to pounds 121m this year. With the shares down 4p to 167p yesterday they are on a forward rating of 15. With so many uncertainties, they are no more than a hold.