The Investment Column: Waddington

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The Independent Online

ALMOST EVERY company connected to the pharmaceuticals industry was battered last year by the Asian slump and the global economic slow-down. But had less luck than most. Could its luck be about to change with the appointment of John Hollowood, formerly executive chairman of turnaround miracle Inspec, as chairman?

The Leeds-based group makes plastic cups, specialist printing, such as direct mail advertising, and pharmaceutical packaging. Martin Buckley, the chief executive, described last year as a "nightmare".

The large pharmaceuticals companies - the bulk of 's customers - were forced to run down their stocks. Fears of recession led to many of 's direct mail customers putting mailshots on hold. A new production line for plastic cups at a factory in Texas suffered teething problems causing customers to switch to rivals. A profits warning followed, sending 's shares plummeting.

Yesterday's results were depressed. Pre-tax profits fell from pounds 36m to pounds 31.1m, bang in line with a guideline figure issued with the warning. Still, the shares rose 3.7 per cent to 194p, valuing the group at pounds 205.8m.

The outlook now is less negative. The direct mailers are bringing forward those delayed mailshotting projects. Mr Hollowood is no stranger to dealing with profits warnings, which were two a penny at Inspec.

But he presided over both an upward re-rating and the sale of Inspec at a premium to chemicals group Laporte.

Even so, still has a mountain to climb to win back its let- down beaker customers and Mr Hollowood does not have an executive role at the group.

At 8.5 times next year's forecast earnings, 's rating is deservedly modest though investors should hold the shares for the time being.