Rallentando from Boosey & Hawkes

AN OFF-BEAT performance in the first half from Boosey & Hawkes looks set to be followed by a poor second act as recession catches up with the music publisher and instrument maker.

Cutbacks on music spending by schools and parents was compounded by a decline in royalties from B&H's list of hundreds of composers, ranging from Rachmaninoff to Bernstein. Shares fell 95p to 865p.

'Musical instruments are a discretionary item and, as such, are affected like any luxury when there is a recession,' said the company's chief executive, Richard Holland. Royalties take time to collect, which is why B&H is late into the recessionary cycle - and late out of it.

Mr Holland is used to pre-tax growth rates of around 20 per cent, but this time taxable profits rose only 10 per cent to pounds 1.44m in the six months to 30 June.

And the chairman, Walter Connor, sounded a warning note: 'During the second half of 1992 there is the risk of a further market setback, particularly in Japan which is a major market for this group. Consequently, we must expect our overall rate of progress to be much slower than in previous years.'

However, B&H said it slightly increased market share. Earnings rose 13 per cent to 18.6p, and the interim dividend rose 9 per cent to 6p.

The company made redundancies in the UK and Germany, and its publishing division is diversifying outside classical music into television theme tunes. B&H recently signed a deal to run Granada Television's worldwide music publishing rights.

About 85 per cent of B&H equipment is made in Germany and France, so the devaluation of sterling will be felt in Britain, which imports 25 per cent of the instruments. Because of currency fluctuations, Philip Meredith of Kleinwort Benson, the company's broker, has slightly downgraded his full-year profit forecast to pounds 4.2m. Some benefits of devaluation should feed into the 1993 results, he said.