Bottom Line: A rally at Ransomes

IN LESS than a year the new management team at Ransomes, the Ipswich-based maker of grass cutting equipment, has performed beyond all expectations.

Twelve months ago Ransomes looked doomed. It made net losses for four years on the trot. Ordinary dividends were nothing but a distant memory and the company had also passed on its preference share obligation.

Crippled by debts incurred by an ill-timed US acquisition in 1989, it was struggling through a sustained period of weak demand for its products.

After pressure from institutional shareholders, Peter Wilson, ex-BTR, was given the helm. Admittedly he has been helped by a kinder economic climate in the US and the UK.

But the near doubling of profit margins owes more to the implentation of cost efficiencies and a reinvigorated marketing strategy.

Most impressive has been the way Ransomes updated its product range with a keen eye on the US golf course market.

At 42p, up 12p yesterday, annualised first-half profit indicate a p/e of only 6 but there is as yet no dividend news.

The shares have risen by 240 per cent since the Independent recommended a purchase in January. They should still be bought despite the prospect of a rights issue to pay off debt next year and the uncertainty about the resumption of dividends.