Syngenta's seeds falling on stony ground

St Ives still waits for an upturn; Anite looks a costly exercise; Totally unappealing

Farming is in crisis. The notion is a commonplace not just in this country but across the Western world. After four years of bumper harvests, farmers are reaping lower and lower prices from their crops. So Syngenta is reaping lower levels of business from its farming customers.

Syngenta makes agrochemicals, crop protection agents such as insecticides and weed-killer. The company is an international goliath formed at the end of 2000 by merging the agribusinesses of AstraZeneca and Novartis, which have slimmed down to focus on pharmaceuticals. The new company, the biggest agrochemicals firm in the world, is listed on eight stock exchanges, and its shares were getting a battering yesterday which in London took them down 300p to 4,250p.

A trading update revealed just how poor business remains. In the first three months of the year sales were no greater than they had been at the start of 2001 and, because of the weakness of the euro and yen, the company in fact reported sales of $1.84bn, down from $1.91bn a year ago.

The merger was a defensive move and it will produce $160m of cost savings this year alone, so earnings growth does look assured. But a resumption of sales growth will be needed if the stock is to resume its recent strong run. The company has launched four big new products, including a herbicide to protect corn, and there is encouraging sales data on them. But the company still has to cut out another couple of dozen less profitable product ranges, which will hamper the figures for a while yet.

The seeds business, which currently accounts for 15 per cent of revenues, could be bolstered by acquisitions but the backlash against genetically modified food, a Syngenta speciality, mean prospects are not what they once were.

Syngenta has proved a relatively strong defensive play in the chemicals sector – look at the appalling trading from chemicals firms selling to industry during the recent slowdown – but agriculture is one area of the economy not showing any signs of a recovery. Indeed, the company confirmed yesterday that the market should expect no sales growth overall this year. The shares deserve their discount to the chemicals sector. Avoid.

St Ives still waits for an upturn

Everyone is waiting for companies to regain the confidence to spend on advertising or maybe swan into the City to do a deal. But for St Ives, the printer, it is proving a very long wait.

Miles Emley, the chairman, speaking at yesterday's half-year results, could offer no words of optimism on the outlook for St Ives' activities in magazines, direct mail and company prospectuses. That contrasted with many of St Ives' more upbeat rivals, and investors sent the shares down 30p to 430p.

The slowdown was felt across the board, sending profits down from £30.3m to £6.1m even as acquisitions gave a modest lift to turnover.

Magazine publishers, especially in the travel sector, were struggling to sell ads and have been slashing pagination as a result. The CD booklet printing market remains viciously competitive. Contracts to print prospectuses for share issues and mergers were predictably sparse, while dwindling enthusiasm for direct mail promotions saw St Ives decommission some 32 printing presses in Germany.

Mercifully, demand for books in the UK held up well, with St Ives' flexible printing technology helping it win contracts to produce most of the constituents of the bestseller lists, including the Harry Potter series. Mr Emley is not giving up. Rather, he has invested a further £50m in the business to improve the productivity and flexibility of St Ives' presses.

ABN Amro, the house broker, trimmed its full-year profits forecast to £34.9m, giving earnings of 22.8p. That rises to £42.1m and 27.5p in 2003, with the benefits of recent cost cutting expected to show just as demand picks up.

Investors may be tempted by a stock highly exposed to any sudden upswing in advertising or corporate activity, not least when the shares are yielding about 4 per cent. But St Ives itself warns there is very little visibility to this business, and the shares are only for the brave.

Anite looks a costly exercise

Anite is a tough company to follow. After a spree of acquisitions, the software services group has been left with tangled accounts, where there is plenty of scope for misunderstandings and, in the current climate, scare stories about financial irregularities.

Anite does look too good to be true: in a sector that has seen growth assumptions crumble and trading collapsed, it is set to post earnings growth of 25 per cent in the year ended this month, and the same again next year.

Much of that is being driven by Anite's strength selling services to local government, which is being encouraged to shift as much of its work online as it can. Anite has made several in-fill acquisitions in this area recently and boasts a broad, if not market leading, range of software expertise.

But organic growth – stripping out acquisitions – is nigh impossible to calculate. The best guesses are that local government sales are up a little over 20 per cent, while the biggest IT consultancy division is flat or slightly down.

Analysts say it requires weeks of patient work and just a touch of imaginative flair to forecast Anite's future growth. Private investors may decide that, with the shares trading at 21 times this year's earnings, the shares are not cheap enough to bother with.

Totally unappealing

Results from Totally were not totally illuminating yesterday.

The company started out running the totallyjewish website, and in 2000 also bought the London Jewish News free-sheet. The group lost £3.1m last year, even more than the £2.4m it blew in 2000. It wrote off £2.2m of the value of the LJN, which it now says is on the verge of profitability but is still some way from pushing the Jewish Chronicle off its perch as the community's pre-eminent media business. Overall, the group could take 18 months to turn a profit.

The future shape of the group and its finances remain totally unclear. It promised "a Jewish media joint venture in the USA", though it is still a little while from signing the deal, which it says won't cost it any money upfront. And financing still remains a big worry. A £275,000 rights issue is now promised for May – which makes the shares, at 1.25p, wholly unappealing.