The Investment Column: Portmeirion's small servings

Portmeirion Potteries, the up-market table and ovenware business, yesterday served up another set of disappointing figures. Neither summer windfalls nor winter sales seem to have brought any joy to the group and it was forced to issue its second profit warning in the last six months. This caused the shares to crash another 52.5p to 240p yesterday, chipping another pounds 5m off its market capitalisation. It is now valued at just under pounds 25m, less than half its worth last summer.

In August the company, which is still controlled by the family of architect Clough Williams-Ellis, reported a 9 per cent increase in first half profits to pounds 2.7m but warned that difficult trading conditions meant full year profits would be flat.

The shares have been sliding downwards ever since and yesterday the company added to investors woes by warning that earnings would now fall pounds 1m short of last year.

A special anniversary promotion rescued first-half profits in the US market, which accounts for over 40 per cent of turnover. However, sales have fallen away in the last few months, while the continued strength of sterling has depressed exports to Europe.

The home market also remains sluggish. Portmeirion does not seem to have attracted any of the windfall spending which has helped keep demand for other consumer goods buoyant, and the company remains opposed to the price discounting which consumers increasingly demand.

Analysts are also concerned at the lack of new products in the pipeline and have again downgraded profits forecasts. They are now looking at pounds 5.4m for 1997 and pounds 5.65m in 1998. The shares now look very cheap at under seven times this year's prospective earnings but investors would be wise to wait for any signs of a sustained recovery before buying.

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