The Investment Column: BTP

BTP, THE speciality chemicals business which makes the ingredients for Viagra, has been giving itself something of a makeover. Steve Hannam, chief executive, says his transformation of the group into a focused fine chemicals company is complete. But yesterday's results contained some nasty surprises in the continuing businesses.

The company remains exposed to the troubled global agrochemicals industry which last week witnessed the merger of the agribusinesses of Novartis and AstraZeneca. The delay of a single US contract sent profits in BTP's fine chemicals division into reverse.

Still, Mr Hannam insists the consolidation in agrochemicals works in BTP's favour as more companies jump on the outsourcing bandwagon. Indeed, he's looking to snap up manufacturing sites jettisoned by the life science majors.

Meanwhile, the performance chemicals business reported modest gains on the back of a recovery in its leather treatment chemicals business. Again, there were a couple of lost contracts to spoil the story.

Still, the bulk of the group's business is in ingredients for pharmaceuticals, which has over 80 projects in development to provide a degree of insulation from downside risks in any single area. While the deferred and lost contracts were a disappointment, the longer term outlook looks uncertain for BTP given recent downgrades to the pharmaceutical sector. Analysts expect pre-tax profits of around pounds 58m and earnings of 22p per share. The shares, down 53.5p at 299p, are risky.