Salvesen hit by fresh setback

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The Independent Online
A collapse in the pea crop has become the latest mishap to derail Christian Salvesen, the ill-fated transport to generator hire group, which has seen its shares wilt since it rejected a 405p a share offer from the rival Hays group last year.

Yesterday's coded profit warning, which came alongside further news of the group's demerger plans, saw the shares slip a further 6p to 276p. Sentiment was further dented by the revelation that the current finance director, Ian Adam, would not be staying with either of the companies resulting from the split.

Salvesen said volumes at its food services division, part of the continuing business and the UK's largest processor and packer of frozen peas, had been "significantly impacted" by the unseasonally wet weather in June and July. Tonnages processed were likely to be cut by around 40 per cent and the problem was being made worse by the increase in the value of the pound, sucking in imported peas from the Continent.

Edward Roderick, who will become chief executive of the new slimmed-down group if the demerger goes through, said prices had been generally flat, with declines experienced in some areas, as a result of cheap imports from Belgium and Holland. He said profits in the business, which numbers Albert Fisher, Bird's Eye Walls, Sainsbury and Safeway amongst its customers, would be impacted if processing volumes failed to meet expectations.

Analysts suggested profits from food services, which chipped in pounds 6.8m to operating profits last year of pounds 44.5m at the continuing Salvesen business, were likely to be nearer pounds 3m this year. One said that, with the continental logistics operation being hit on translation by the strong pound, it was difficult to see the group making up the shortfall elsewhere.

Meanwhile, Mr Adam, who had been earmarked to continue as Salvesen's finance director, will now only stay on to oversee the group's move from Edinburgh to Northampton to be completed in the next three months. He will get a pay-off amounting to pounds 75,000.

Shares in Aggreko, the generator and temperature control equipment hire group which is being spun out of Salvesen, are expected to start trading on 29 September. Despite forecasts that both groups will make profits of around pounds 31m or pounds 32m this year, analysts expect Aggreko to open at around 150p a share, with Salvesen at about 125p.

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