Bottom Line: Out of the fridge . . .

IN THE face of a 98 per cent fall in pre-tax profits at Dalepak Foods, the frozen beefburger maker, a mere 4 per cent decline in the share price looks positively generous.

Yesterday's news, of course, is not all that new. This time last year Dalepak warned that the devaluation of sterling, which forced meat prices sharply higher, would damage profits.

In the half year just passed, the cost of raw meat material increased by 11 per cent - most of which Dalepak was forced to swallow by the supermarkets. As a result, taxable profits for the six months to 31 October slumped from an already depressed pounds 1.6m to a paltry pounds 29,000.

The interim dividend has also been cut from 1.5p to 0.5p and is uncovered by earnings per share of 0.2p (9.3p).

If the full-year payment is slashed proportionately, the shares, down 6p yesterday at 139p, would yield 1.8 per cent. Hardly an encouraging investment proposition but Dalepak is battling back. Costs have been cut and the company says it is managing to make some selling prices stick.

This claim, at first sight hard to believe, is made more credible once it is appreciated that the price is held by keeping the pack prices the same but reducing the number of burgers in the pack.

It is pursuing product innovation and, following its success with vegetarian burgers, has high hopes for a tuna grill steak.

A price/earnings ratio for this year is more or less meaningless because profits are so tiny. More relevant but still quite optimistic forecasts of pounds 1.5m for 1995 mean the shares are trading on a multiple of 15 times earnings.

While that is not particularly demanding in relation to the market as a whole, the rating is some way ahead of the food manufacturing sector.

Yet Dalepak occupies one of the least attractive parts of this already hard-pressed stock market segment. In these circumstances the shares look too high and should be avoided while the full implications of the high-street 'food wars' are being digested.