Rising cost of meat leaves Dalepak figures depressed

DISAPPOINTING profits from Dalepak, the food processor, sent the shares down 12p to 193p yesterday - only 2p above a 12-month low point, writes Robert Cole.

Dalepak, which makes beef burgers and vegetable burgers, has been hit hard by a rise in the cost of meat. Taxable profits for the year to 30 April slumped to pounds 2.2m from pounds 3.9m.

The company's operating profit margin fell from 9.7 to 5.8 per cent. In the past few months huge write-offs at the food manufacturer Hillsdown and a dire warning on profits by Sims Food, a butcher, have told of deep difficulty in the market for meat.

Dalepak said the situation was worsened by the devaluation of sterling. A lower pound makes UK processed meat cheap to overseas buyers, chasing the price up. Dalepak also said it was unable to hand on its cost increases to consumers.

It painted a bleak picture on current trading. It said conditions 'remain difficult, with strong competition in both our main markets'.

Dalepak sells its product frozen. It has spent more than pounds 2m on sophisticated freezing equipment, which has yet to become operational. Difficulty in commissioning the plant has exacerbated trading problems.

Earnings per share fell to 13p from 23p. The dividend stays at 6p.

Sally Jones, an analyst at the stockbroker Panmure Gordon, was predicting a rise in taxable profits to pounds 3m for the current year but now thinks the company will make no progress on last year's result.