Dalgety feeds hopes in the City

It is five months since Dalgety announced it was selling its Golden Wonder and Homepride businesses to pay for the pounds 440m acquisition of Quaker's European pet foods. The plan was to move away from snacks and sauces to concentrate on pet food, agribusiness and food ingredients.

The City liked the strategy but wondered whether the company could achieve its aim of raising pounds 300m from the disposals. That target looked much more attainable yesterday when CPC, the American food group that makes Ambrosia rice pudding and Knorr soups, agreed to pay pounds 180m for Dalgety's Golden Wonder Pot Noodle division. Final offers for the Homepride and Golden Wonder snacks businesses are already in and the company says it hopes to announce buyers for both by September.

The shares put on 4p to 445p in response to the news, but the City could be in for a disappointment. The prices to be obtained for the snack businesses are likely to be disappointing compared with pot noodles. The snacks market is competitive and neither PepsiCo, which owns Walkers Crisps, or United Biscuits, which owns KP, is likely to be interested. In sauces, a possible buyer is Unilever which has already bought the Colmans mustard and sauce business.

Progress in the pet foods business is already being made. Dalgety plans to save around pounds 40m by reducing administration costs in Europe, increasing efficiencies in manufacturing and extending some of the Spillers formats, such as foil packs for pet food, to the Quaker brands. The UK market for dog food has fallen recently, but Dalgety is more confident about prospects for Europe, where Felix cat food is the fastest-growing brand in the sector.

Dalgety has been impressed with the Quakers management and a string of new product launches is in the pipeline. The marketing spend will rise and the company should be able to make its budget count more in pet foods, where it reckons it can hold its own better, than it could in the snacks business.

Brokers Henderson Crosthwaite are forecasting profits of pounds 128m for the year to the end of June and pounds 140m for next year, which puts the shares on a forward rating of around 13. After a good run so far this year, the share price is unlikely to excite in the short term but should improve when the benefits of the Quaker acquisition begin to come through. Hold for now.

Howden raises

its head again

Howden, the engineering group based in Glasgow, has been keeping a low profile since its well-publicised problems in supplying a machine to tunnel under Denmark's Store Belt. That dispute knocked a huge hole in profits in 1991 and saw the shares tumble to 30p at one stage.

Since then, and in the teeth of the worldwide recession, the group has been steadily rebuilding profits and last year saw the trend continued. Yesterday the group revealed a pre-tax figure of pounds 30.6m for the year to April, a rise of 11 per cent on 1993-94 which becomes 17 per cent if the previous year's pounds 1.38m gain on the sale of property is excluded. Earnings per share went from 7p to 7.6p, out of which a final dividend of 1.81p takes the total payment 11 per cent ahead to 2.7p.

The figures were broadly in line with expectations, but the shares added 2p to 85p yesterday as analysts warmed to news of a strong order intake last year. After signs of sluggishness at the interim stage, the order book ended the year 14 per cent higher at pounds 444m.

Compared with turnover of pounds 438m last year, that puts Howden in a strong position for 1994-95.

Profits got a pounds 4.03m boost from acquisitions, on which the group spent pounds 24.9m, including related expenditure, in the past 12 months. The three big ones, Donkin in South Africa, FCD in the US and Burton Corblin in France, chipped in around pounds 1m each, with a number of minor buys making up the balance of the contribution from acquisitions.

All areas of the world raised operating profits last year, but in Europe, the main theatre of operations, the total continues to be restrained by difficulties in Germany. Losses at the Wirth subsidiary were cut from the pounds 3m-pounds 4m run up the previous year, helped by a pounds 27m tunnel boring machine contract, but order intake there has not been sustained.

The strength of the mark and general economic problems continue to cloud the immediate outlook in Germany.

The still small Asian region, where profits rose from pounds 1.6m to pounds 2.1m in the latest period, is a key area for growth. Howden is spending pounds 5m out of a total capital expenditure budget of pounds 7m this year on a factory in China to produce fans and heaters for the power industry and further moves in the Pacific area can be expected.

Profits this year should hit around pounds 34.5m, making the shares reasonable value on a forward multiple of around 10. Selling by institutions who took up last year's placing at 93.75p could restrain the price in the short run, however.

Acquisitions lift

Gibbs Mew

Shareholders in Gibbs Mew, the Salisbury brewer, have prospered since seeing off Brierley Investments' 200p-a-share offer in October 1992. The shares at 433p are showing a tidy profit, even after last July's rights issue at 340p and yesterday's 11p fall. That owes much to the arrival on the board of brothers Tom and John Hedderson, who have taken advantage of the big brewers' forced pub sell-off in the wake of the Government's beer orders to reorientate the company towards retailing.

Last year's rights paid for the pounds 12.8m acquisition of Centric, owner of 197 tenanted pubs in the Midlands, which nearly tripled the group's estate and was the principal factor keeping profits moving ahead in the 12 months to 1 April. The pre-tax figure jumped from pounds 3.06m to pounds 4.44m, with Centric chipping in pounds 2.3m on sales of pounds 6.81m.

That left profits from the core operations down from pounds 3.19m to pounds 2.66m, an underlying decline of pounds 750,000. The shortfall is blamed on infrastructure spending to expand the group's 20 pub managed estate, a dispute over discounts with "a large supplier of wet goods" and a shift away from low-margin, high-volume free trade customers for Gibbs' beer brands such as Bishop's Tipple.

The board is being strengthened by the latest in a string of recruits from Price Waterhouse, this time Sir Jeffrey Bowman, and Richard Martin, formerly with Allied Domecq, as non-executive directors.

The plan is to keep growing the retail side, particularly in the South- east. There are still said to be plenty of opportunities to pick up pub chains whose flotation plans have been frustrated. But Gibbs is clearly going to have to pay up: last December's acquisition of six managed pubs around the M25 came in at somewhere over pounds 500,000 per property, compared with around pounds 150,000 for the average Centric outlet.

After a pause in earnings growth last year, brokers Greig Middleton are expecting profits of pounds 6.3m in the current period to get them going again. But a forward multiple of 13 probably fairly discounts the near-term growth.


Turnover pounds P/Tax pounds EPS Dividend

AromScan (F) 1.2m(70,000) -1.5m(4,000) -6.34p (1.29p) -(-)

Bromsgrove Industries(F) 113.8m(86.5m) 8.3m(6.6m) 7.82p (7.12p) 3.1p (2.8p)

Gibbon Group (F) 27.5m(25.7m) 2.05m(1.7m) 13p (10.9p) 4p (3.3p)

Morris Ashby (F) 32.7m(24.6m) 2.9m(1.8m) 18.2p (13.6p) 4.55p (3.8p)

Northamber (F) 178.5m(114.5m) 3.1m(669,000) 12.4p(3.1p) 1.2p(0.3p)

P & P (I) 171.7m(118.9m) 6.2m(2.7m) 5.3p(2.8p) 1.15p(0.95p)

Wilshaw (F) 45.9m(36.6m) 5.1m(3.25m) 3.84p(2.4p) 0.5p(0.35p)

(Q) - Quarterly (F) - Final (I) - Interim

Start your day with The Independent, sign up for daily news emails
New Articles
tvChristmas special reviewed
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all