The Investment Column: Jury still out on United Biscuits
Friday 13 September 1996
UB's shares, banished from the FT-SE 100, recently hit an 11-year low of 200p, having halved in just three years. In 1995, UB reported its first loss and cut the dividend. Selling the main culprit, loss-making Keebler in the US, and closing operations in Spain resulted in a one-off hit of pounds 150m.
Yesterday's interims were a more mundane affair. Excluding exceptional items, pre-tax profits almost doubled to pounds 44.9m while the dividend was held at 3.5p. Operating profits in the UK rose 15 per cent to pounds 42.3m, but profits fell in the Asia-Pacific region to pounds 2.2m from pounds 5.6m as the Australian division came under attack from PepsiCo.
UB's aim is to grow by getting the best out of its remaining businesses and by keeping costs down. To this end it has set ambitious internal targets. By the end of 1998 it aims to have lifted return on capital from a moving average of 14.5 per cent to 25 per cent, while increasing operating margins from 6.5 to 8 per cent.
Setting goals is one thing, meeting them is altogether different. While Eric Nicoli, chief executive, stressed that the interims were "relatively uneventful", management has an unhappy knack of upsetting the market and it will take at least another set of figures before the jury returns with an acquitted verdict.
In the meantime, Merrill Lynch's middle-of-the range forecasts assume pre-tax profits of pounds 109m rising to pounds 123m in 1997. That puts the shares, up 10p to 212.5p, on a forward PE ratio of 15 falling to 13. High enough.
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 3 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Scottish independence: Despite defeat history may still point to Alex Salmond as the victor
Scottish independence referendum: Frankie Boyle reacts to nation's 'No' vote - 'To be fair, I've always hated Scotland'
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Scottish referendum: Police struggle to control Unionist rally in Glasgow's George Square
Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...