Staveley issues profits warning

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The Independent Online
STAVELEY INDUSTRIES, the diversified industrials group, issued its second profits warning in little more than two months yesterday forcing the board to launch a review of its options.

Staveley shares fell 2.5p to a new low of 63.5p after the company said exceptional charges in the current year would be pounds 3m higher than expected at pounds 22m. The costs push the group to a loss of pounds 6m in the year to March.

The warning is expected to lead to renewed calls for a break up by 16 per cent shareholder, Guinness Peat. One analyst said: "It's going to break up eventually. The problem is that if it breaks up now, shareholders won't get decent value. The salt division on its own should be worth more than the current pounds 73m market capitalisation."

British Salt, whose prices are regulated by the Office of Fair Trading because of its high market share, accounts for 11 per cent of Staveley's sales but 99 per cent of its operating profits.

Staveley's other interests include a host of service businesses from non-destructive testing to a contracting division.

The company has been restructured, with 30 per cent of its senior management axed in the past year. But this year's mild winter and resulting shortage in salt sales has further eaten into profits in the core salt business.

Chris Woodwark, chief executive, said yesterday's "housekeeping statement" was an attempt to keep shareholders informed. He added: "We've got a lot of costs coming out and a lot of reorganisation as we get into a leaner, fitter shape. My aim is to build this company into something which shows a return on shareholder value."

On Investec Henderson Crosthwaite's pre-exceptional profits forecast of pounds 16m, the shares trade on a forward multiple of just 6. "It's a difficult one to be optimistic about but we've got it down as a hold because underlying value is in excess of the share price," says analyst Geoff Allum.