The effect on UB has been a share price that has underperformed the market by 60 per cent over the past five years. Yesterday's 5.5p fall took the stock to a five-year low of 198p.
To its credit, the company has taken tough decisions. It pulled out of the United States when the Keebler operation was sold two years ago. Since then it has also sold nine other businesses, mainly in continental European snacks, and rationalised its manufacturing base through eight factory closures. Other disposals are expected in low-margin areas such as UK snacks and continental businesses, though there are no immediate plans and buyers may prove thin on the ground.
The strategy going forward is to concentrate firepower on fewer key brands, such as Hoola Hoops, Skips and Penguin, while driving forward more recent launches such as the McVities Go Ahead range of low-fat snacks.
The portfolio has certainly been strengthened. Two years ago, 40 per cent of UB's sales delivered a return on capital employed of 5 per cent or under. But after disposing of businesses with pounds 1bn of sales, just 5 per cent of turnover is now in that category. By contrast, more than three- quarters of the group's business returns more than 20 per cent on capital employed.
While it is difficult to fault the strategy, the criticism is that it is taking a long time to feed through to results. Profits before exceptionals in the six months to 12 July were flat at pounds 45m and the company is struggling to drive growth. Sales fell by 3 per cent at constant currency rates and the company admits there is unlikely to be any top line growth in the second half. All this means UB is relying on efficiency improvements to improve the bottom line. So while the City had been hoping that UB was moving into the recovery phase, the best it can look forward to is another year of consolidation.
The geographic picture is also still very mixed. UK snacks and biscuits profits were flat, but crisps sales fell, with own-label business particularly weak. In Asia Pacific, profits were wiped out by a price war in Australia, where PepsiCo's Frito Lay is attacking UB's dominant share in the grocery sector.
With the bid premium evaporating and analysts downgrading full-year forecasts to pounds 110m, UB shares have now fallen to a forward rating of around 13. This is hardly expensive, but for a company with this record, not cheap either.