Consumers go soft on furnishings

THE SOUND of groaning springs could be heard in the furniture sector this week, as bed maker Airsprung and sofabed-to-furniture concern Wyefield Group both reported less than satisfactory interim and 18-month figures. Airsprung shares fell 36p to 182p on a profits warning.

Management blamed hot weather for weak consumer spending and house broker Beeson Gregory cut its 1996 forecast by pounds 1.4m to pounds 5.5m. At Wyefield, earnings per share rose 10 per cent to 3.1p, and there is a final dividend of 1p a share (0p). But earnings from last year's Medallion Upholstery acquisition were not as good as hoped for, and the shares have held steady at 28p - chairman David Harland says trading continues to be difficult. Two to avoid.

RTZ remains a cornerstone of any long-term investor's UK portfolio, even if its business is nearly all overseas. It is increasingly focused on gold and copper, while the mighty Escondida copper project in Chile and Kennecot, the third-largest copper mine in the US, makes the company the second-largest copper producer in the world.

As well as being a well-managed business, the group offers private shareholders an unusual incentive to buy the shares. Since last year RTZ has paid almost three quarters of its dividend in so-called foreign income dividends. Never mind the technicalities - a basic rate taxpayer in effect earns an additional 25 per cent, to offset the company's Advanced Corporation Tax liability.

So the yield as quoted in Friday's Financial Times of 3.4 per cent is in fact closer to 4 per cent. The enhancement does not apply to the big City pension funds, which means that for once the private investor scores at the expense of City fat cats.

BRITAIN'S slender hopes of a biotechnology revolution are pinned on a handful of companies, of which British Biotech is by far the most significant. The shares have been on a sudden splurge in the past month, climbing to around 770p from about 500p, and were up 12p in the past couple of weeks at 786p on Friday. The reason for the heightened excitement has been further progress on a new drug to treat pancreatis, Lexipafant, for which there is no existing treatment. The City reckons annual sales of Lexipafant could hit pounds 125m three years after launch. But given losses at the company are likely to continue at around pounds 30m a year over the next few years, on turnover little more than a tenth of that, the risks become clear. Take profits.

THE FROTH surrounding UK merchant banks and financial stocks is abating, after the foreign takeovers of Kleinwort Benson, Barings, and Smith New Court earlier this year. But BZW analyst Philip Gibbs believes there are still some stocks which remain undervalued in the sector. Most attractive, he thinks, is mini-merchant bank Singer & Friedlander. The shares trade on a far lower prospective earnings ratio than Schroders, Hambros or Close Brothers, while expansion into security markets, including its purchase earlier this year of Carnegie International, the premier Scandinavian stockbroker, makes it attractive to a bidder. Its successful People's Phone business also accounts for about a quarter of the group's pounds 214m market value. At 109p, the shares are a buy.

TUESDAY sees Hong Kong conglomerate Jardine Matheson report interim figures. Of greater interest to UK watchers will be the light, if any, the group can shed on its intentions for its 26 per cent stake in construction to shipping and hotels group Trafalgar House. Whatever is revealed, it is unlikely the meeting will have much positive news to impart: further doom and gloom in the construction sector has almost certainly put paid to that. After Traf's failed bid for Northern Electric, there was concern that the business is overextended on its banking facilities and would require further funding if it was to enjoy decent prospects of recovery.

Kleinwort Benson estimates Traf will post losses of pounds 70m for the full year to 30 September 1995, and that net debt will rise to pounds 300m, up by a half on the June level. Cash outflow, however, seems to be containable for the time being, and another rescue rights should not be needed for another 18 months at least - by which time the corner could have been turned. With Trafalgar at 32p, the business is no more than a tick on the back of the mighty Jardine. But the shares remain a sell.

HANG on to shares in Lonrho. A recent surge has pushed the price close to its high for the year, up 7p in the past few days, to 168p, and it seems the group's long-suffering army of small shareholders are poised to reap the rewards of Dieter Bock's new broom. Latest word in the City is to expect imminent news of the long-awaited spin-off of the Princess and Metropole Hotel groups.