The Investment Column: Courtaulds counts on Tencel
Thursday 20 November 1997
Tencel, touted as "the Lycra for the millennium", is unlikely to prove as lucrative as Courtaulds once hoped. First, the wonder-fibre is used in jeans - M&S is among the notable Tencel converts - and demand in the denim market is relatively weak. Second, Courtaulds, once the sole Tencel supplier, is now beginning to face competition. Nevertheless, prospects for Tencel are still good. Courtaulds reckons that Tencel will account for 20 per cent of all turnover within five years. Currently, it accounts for about 3 per cent of sales.
Even if Tencel fulfils all expectations, it is unlikely to be sufficient to transform Courtaulds into a high-growth organisation. The company needs to look elsewhere if it is to turn things around. Prospects at its coatings & sealants division, which account for about half of turnover, look good. Courtaulds has an entrenched position in market niches, such as aircraft coatings. Polymer products, which saw a moderate rise in profits this half, also look strong.
The real problem is that around one-fifth of revenues still come from viscose and acrylic. Not only are these mature markets, but competition, particularly in viscose, is vigorous. What is more, raw material prices for viscose and acrylic are notoriously volatile.
Forecasts from ABN Amro put Courtaulds on a forward p/e of about 12. The large discount to the market looks justified. Hold.
- 1 I was a Woman Against Feminism too
- 2 Fifty Shades of Grey movie trailer released: First look at Jamie Dornan as Christian Grey
- 3 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 4 Students offered grants if they tweet pro-Israeli propaganda
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned
Peaches Geldof: Her final day – and her fatal decision
Students offered grants if they tweet pro-Israeli propaganda
Israel-Gaza conflict: Israel may have committed war crimes, says UN human rights chief
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
The truth about conspiracy theories is that some require considering
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
iJobs Money & Business
£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...
competitive: Progressive Recruitment: This really is a fantastic chance to joi...
£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...
£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...