Smaller companies: Eadie still wheelchair bound

Oldham-based wheelchair maker Eadie Holdings (8.5p) has done little for its shareholders over the last five years. While sales have almost doubled from pounds 23.3m in 1992, to pounds 41.6m last year, the trend in pre-tax profits has been uneven, to say the least.

It is now on to its third profits warning in 12 months, and had to parachute company doctor John Kembery in as executive chairman last summer.

Problems for Eadie have flowed thick and fast since it had to restate 1995 profits by pounds 600,000. A pounds 500,000 restructuring was then announced in October.

And so it went on; a problem subsidiary was sold, creating a write off of pounds 890,000. In 1996, losses came in at exactly pounds 1m, and the dividend was passed.

At the results in April, Mr Kembery said that after the last profits warning in March, "we have found other things we did not feel confident about". However, he added: "I am hoping not to have to tell shareholders any more bad news".

The group is also hunting around for a finance director - a post previously filled by the former chief executive, who has resigned.

The business is divided between wheelchairs, side curtains and tail lifts for lorries, wire drawing and tyre distribution. All are low margin areas, with little to excite.

Meanwhile, the strength of the pound will continue to hamper export growth. One bright spot is Belgravium, an acquisition made in 1995, which makes electronic devices for warehouses. However, its sales of pounds 3m lack the critical mass needed to compensate for the problems elsewhere.

Eadie reflects a problem common to many small companies - while it is possible to build sales, both through acquisition and organically, it does not always translate into added value for shareholders.

It is difficult to predict how Eadie may come out of its latest difficulties, but there is no reason to view them as a long-term investment. Orders last year were weak, especially among some of the export-led businesses, so the situation in that respect can only have weakened since sterling's rise.

House broker Greig Middleton rates the shares a speculative buy, on the basis that you buy pounds 1 of sales for every 15p. But that is trying to make a silk purse out of a sow's ear.

Since the outlook from here on is so unclear, and the past record is so uneven, the shares are a sell.