The Investment Column: Wagon remains a roller-coaster

Wagon Industrial Holdings has subjected its shareholders to a hair-raising ride over the past five years. The shares have been up and down like a yo-yo while chief executive John Hudson positioned the group as a diversified industrial company with interests spread across automotive parts, storage and retail systems such as shelving. It has built up strong positions in areas such as springs, pressings and plastic trim as well as storage and check-out systems for retailers.

This was supposed to make the company less exposed to risk but the last seven or eight months have proved otherwise. There was a profits warning in February caused by the delay in some car part orders.

There was another yesterday when Mr Hudson reported weakening demand in manufacturing industry which was affecting the storage products division. France and Germany are also proving difficult markets, with pressure on prices.

The retail systems division is suffering from the decision by some retailers to delay refurbishment programmes. The company was already expecting retail system profits to be weighted towards the second half. This bias will be exacerbated.

The result was another slide in the share price, which fell 26p to 348p. They stood at more than 500p as recently as last year. All this has deterred some in the City who have been disappointed once too often when the company's bullish noises have not been backed up by trading performance.

Pre-tax profits for the year to March were down slightly to pounds 20m, though this was due to pounds 6m of losses on disposals. Operating profits rose 16 per cent to pounds 28m.

While the automotive division has been sorted out as the delayed orders materialised, profits were still lower at pounds 9.4m. Retail systems profits also fell.

After several years of growing market share with bolt-on acquisitions that included last year's pounds 21m purchase of Sumit, the cash-rich shell firm, the plan is to invest in existing businesses.

Analysts are forecasting profits of pounds 26m this year. This puts the shares on a forward rating of 12 - relatively cheap but not one for the faint- hearted.