The Investment Column: Investors develop a thirst for HP Bulmer as turnaround story gains credibility

A LITTLE over a year ago, investing in HP Bulmer, the UK's biggest cider maker, would have seemed a singularly unappetising prospect. The company had scored a number of own goals including the poorly-managed integration of the White Lightening cider brand and a failure to establish adequate price controls for stronger brands such as Strongbow.

But all that appears to be in the past. Bulmer, which also makes Woodpecker and Scrumpy Jack, yesterday announced half-year profits up 14 per cent at pounds 16.7m. It also announced details of a joint venture with San Kong, the biggest brewer in China, to build the country's first cider-making plant in the city of Qufu. The move will cost the group just pounds 200,000 in working capital and is part of an ambitious strategy to create a pounds 1bn business which generates 50 per cent of its turnover overseas by 2004.

In November Bulmer agreed to pay pounds 19m for the American Hard Cider Company, which produces the Cider Jack brand. The deal will establish the UK group as the number one producer in the US. Mike Hughes, chief executive, intends to integrate the acquisition with Green Mountain Cidery, the US maker of Woodchuck which Bulmer acquired in August, to capture 40 per cent of the pounds 70m US cider market.

The US acquisition will also provide a platform for Bulmer to step up its distribution business. It is currently negotiating in Australia to distribute European beers through its existing cider operations. Stiff competition pushed down profits for the Australian unit by 8.3 per cent at the half-way stage. But Bulmer also generated new revenue in South Africa, the second largest cider market in the world, where it opened a new factory in November.

Bulmer's shares have been rising steadily this year as the turnaround story gains credibility. They put on another 14p to 456.5p yesterday, which on analysts' full-year profit forecasts of pounds 27.5m puts them on a forward multiple of 14. Good value.