The Investment Column: Stoves cooks up a storm as confidence returns

Stoves chief executive John Crathorne describes the trading performance of his cookers group as "more measured" compared with the frenetic activity of last year. That is something of an understatement. The switchback performance of the shares since their flotation at 163p in June 1995 came after initial euphoria was replaced by disappointment with the group's maiden figures for the first half of the 1995-96 year. A combination of rising raw materials prices, a hot summer and then a 60 per cent surge in demand meant Stoves struggled to cope. At the same time, a rising tax charge as the group's store of tax losses is used up has constrained earnings growth.

Mr Crathorne and his team have clearly found life as a public company a little more distracting than they expected. But after a 7p rise to 297.5p yesterday, investors have little to complain about in the shares' near- 45 per cent outperformance against the rest of the market thus far and there is still plenty of life in the Stoves story.

Yesterday's 57 per cent leap in pre-tax profits to pounds 2.37m in the six months to November came on the back of the first signs of revival in consumer confidence for years. Having risen by more than 4 per cent in 1996, Mr Crathorne is forecasting another 5 per cent increase in the British cookers market over the next 12 months. With less than 5 per cent of Stoves' turnover going overseas, the group's heavy reliance on domestic sales should stand it in good stead in the future.

But that is the icing on the cake. The group has already proved its ability to take on international groups such as Electrolux, GEC and Whirlpool and beat them at their own game. It reckons it has raised its market share by around 2 percentage points to 18 per cent over the past 12 months, mostly through growth in freestanding electric cookers, which saw a record number of product introductions. This produced a leaner margin mix, although operating returns on sales still advanced smartly from 5.5 to 6.1 per cent, boosted by the completion last summer of the group's change-over to its own revolutionary brand of production technology.

Mr Crathorne says the rate of new product launches means the group will never be short of ways to squeeze out further efficiencies. Longer term, the launch into Germany later this month with a new range of electric models, to be followed soon by a move into France, will open up two markets which are together worth around four times that of the UK. Continental operations could take another two years to be contributing fully and Stoves may first need to use its minimal gearing to pick up a suitable brand name to tackle the notoriously xenophobic French market.

For this year, Kleinwort Benson, the group's own broker, is going for profits of pounds 5.8m, rising to pounds 7m next, putting the shares on a forward multiple of 19, dropping to 16. Hold on.

Start your day with The Independent, sign up for daily news emails
election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
ebooksA celebration of British elections
  • Get to the point
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

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

'We will not sit down with Nicola Sturgeon'

In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

How ordinary Britons celebrated VE Day

Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
They came in with William Caxton's printing press, but typefaces still matter in the digital age

Typefaces still matter in the digital age

A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

'Missing link' between Earth's two life-forms found

New microbial species tells us something about our dark past, say scientists
The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

Pan Am Experience: A 'flight' back to the 70s

Tim Walker checks in and checks out a four-hour journey with a difference
Humans aren't alone in indulging in politics - it's everywhere in the animal world

Humans aren't alone in indulging in politics

Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

Crisp sales are in decline

As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

Ronald McDonald the muse

A new wave of artists is taking inspiration from the fast food chain
13 best picnic blankets

13 best picnic blankets

Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

Barcelona vs Bayern Munich player ratings

Lionel Messi scores twice - but does he score highest in our ratings?
Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

Explosive batsman who sets the range for Kiwis' big guns

Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'