Concrete case to keep hold of Aggregate

A cold snap across the central US states and a rainy weather front in the north-east of the country combined to put a depression over Aggregate Industries shares yesterday.

The quarrying group, which produces sand, gravel and ready-mix concrete for the construction industry, warned that sales in the US this spring have been dismal because builders have been hampered in their work by the wet weather. It doesn't think there has been a dampening of underlying demand from the residential and infrastructure building trades, but "overall results for the first six months are expected to show a modest year-on-year reduction".

Don't think that amounts to a profit warning, though. AI insisted that it will be able to meet existing profit expectations for the year as a whole. The City seemed content to take this on trust - and it is fair to say that Peter Tom has proved trustworthy in the past. He is a well-respected chief executive, and his decision to stay on beyond what would have been his retirement in 2005 was cheered by followers of the company yesterday.

But it is also fair to be slightly more worried than before about the prospects for the rest of the year. Cash-strapped US states may not have been cutting back on the big infrastructure projects that are so lucrative for AI, but they are making up for lower tax receipts with other cutbacks, which might include more mundane public works. AI is a famously lean, efficient operation so there are unlikely to be any easy ways to drive down costs more than has already been signalled. Is Mr Tom banking on a pick-up in commercial construction activity that is, as yet, only a twinkle in the eye of recovering stock markets?

These worries matter because AI is not a cheap share. Down just a fraction of a penny yesterday, it would not pay to buy in at the current level, which puts the stock on a multiple of 11 times predicted earnings and would give new investors a dividend payout of barely 3 per cent. But the strength of the group's cashflows mean existing shareholders can hold on, confident in the group's robust balance sheet and strategy of growth through bolt-on acquisitions.

Majestic's grape expectations

Like most of the booze it sells, Majestic Wine gets better as it matures. The wine retailer, which sells bottles by the case from 106 sites across the UK, yesterday uncorked its tenth consecutive year of record profits.

The group, which also has three sites in France aimed at British channel hoppers, now hopes to reach 175 stores, 25 more than it was previously targeting. It usually opens eight sites a year, at locations ranging from a former salmon processing factory to an old pub, so the new expansion plans should ensure profits continue to flow for years to come.

Tim How, Majestic's chief executive, says Britain is becoming a nation of oenophiles. Although Chardonnay, as popularised by Bridget Jones, is still the grape du jour, Sauvignon is increasingly popular. Red wine is our favourite, making up 52 per cent of sales against white's 46 per cent and 2 per cent for rosé.

Majestic's figures showed that the group is still poaching customers from the traditional high street operators and supermarket chains. Its underlying sales outpaced the UK market, growing at 9.7 per cent in the year to end-March. That pace has continued since then, with sales most recently running 8.1 per cent ahead of 2002, despite being up against the tough comparatives of the Golden Jubilee celebrations.

Profits before tax and goodwill soared 38 per cent to £8.3m on sales up 20 per cent at £125.7m. Its customer base rose by 23,000 to 294,000 and the average spend per transaction rose to £104 from £102. Corporate sales now account for 27 per cent of the total, up from 25 per cent.

This column has raised many a toast to Majestic's shares over the last couple of years, and they rose 14p to 605p yesterday. Locking in profits never hurts, but the stock is still one to keep in the cellar.

Wyndeham adds a little gloss

There is one thing to be said for a bracing economic slowdown: it forces companies to take a hard look at the efficiency of their business. Take Wyndeham Press. This printer of magazines and leaflets owns Argent, one of the country's best printers of glossy magazine covers, but Wyndeham has until now made very little effort to suggest that Argent's salesmen should encourage the buyers of the glossy covers that they could get the whole of their mag printed by Wyndeham too.

So corporate rebranding and cross-selling has enabled Wyndeham to pick itself up from the horrors of last year, when the advertising slump meant magazines shrank in size and Wyndeham's profits correspondingly shrivelled. In the 12 months to March, pre-tax profits rebounded to £6.1m from just £913,000 last time.

Wyndeham has also closed three of its 12 printing plants and its confidence in the future - and its strong cashflows - allowed it to raise the dividend payout. The house broker cut its profit forecasts for the current year (on the basis of rising insurance and national insurance costs) and the shares dipped 15p to 132.5p.

At this level they look reasonable value, have a dividend yield of 3 per cent, and will be attractive to those investors who believe in a swift economic rebound.