Jitters knock APV price

Anxiety about APV, the food processor, reached fresh heights yesterday when a procedural announcement on the trading screens was enough to knock 4 per cent off an already depressed share price to an eight-year low of 61.5p.

The announcement confirmed that APV had embarked on a restructuring programme - first made public at interim results in September.

Against a background of falling profits, a slashed dividend and top management departures this was enough yesterday to jangle yet more nerves in the stock market.

Investors were shocked earlier this month when Clive Strowger, chief executive, departed with a pounds 500,000 pay-off. Neil French, finance director, is temporarily replacing Mr Strowger.

APV's annual results showed that finances had been steadily squeezed for the past couple of years. Despite a reduction in debts, interest cover provided by operating profits in 1993 fell from 1.7 to 1.5 times.

However, a source close to the company said the city was becoming unduly alarmed and that APV would probably have no problems if it wanted to reach a new accommodation with its banks.

APV's problems are not set against a background of dwindling orders, a scenario that has often made talks very difficult between banks and other struggling companies.

The company manufactures food-processing machinery around the world. With a turnover of nearly pounds 1b it has been prized as one of the few market-leading British manufacturing companies left afloat. However, over-expansion in the 1980's left the company with an unwieldy product spread and a bloated cost base. Profit margins have been pared to the bone as foreign competition has attacked the company in all markets.

As part of the restructuring programme it is trying to select a few products on which to concentrate its impressive engineering skills, hoping to use market leadership and high technology barriers of entry to protect margins in future.

This restructuring is expected to result in factory closures, sell-offs and, before the end of the year, a pounds 15m- pounds 50m write off.

The effects from fierce competition are plain to see. The pounds 270m liquid-food processing business, a core division, has been hit hard by a struggle for market share with GEA, a German competitor. GEA raised the stakes earlier this year by becoming immersed in speculation that it was considering a takeover bid for APV. Analysts predict that shares will be volatile until the write-off is announced and a chief executive is appointed.

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