Bottom Line: Dalgety tastier minus snacks

IT IS hardly surprising snacks and consumer foods should have come off Dalgety's list of growth businesses. Golden Wonder was solely responsible for the 17.2 per cent decline in underlying profits of its food division.

Its preference for supplying the big boys like Unilever, Danone and Nestle with ingredients rather than fighting them for consumer spending is eminently sensible - even after a 24 per cent increase, Dalgety's pounds 41m marketing spend would be little more than spare change to Unilever. The question is why it is bothering to take them on at all.

Golden Wonder's share of the snack market rose from 16 to 18 per cent but at the cost of a swingeing fall in the food division's margins. In sauces, Dalgety admits that Mars will shortly take over the number one slot: a more aggressive consumer products company would have spotted the potential for expanding the Homepride brand before Mars could get a look-in.

Selling Golden Wonder and Homepride could give Dalgety a useful war chest for acquisitions in ingredients and petfoods - the businesses it has picked out for development. The problem is that even small deals are difficult to find and large ones like gold dust. There is also the nagging suspicion that its relative success with Spillers is simply because neither Mars nor the retailers have yet really flexed their muscles.

Recovery in the European pig market coupled with cost-cutting and a full year's contribution from acquisitions should get this year's profits up to pounds 134m or so, but a rising tax charge will keep earnings growth down to 6.5 per cent. That puts it on 12.1 times earnings - inexpensive enough to consider for the 6.8 per cent yield if for nothing else.