View from City Road: Fisher faces a glut of problems
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Your support makes all the difference.ALBERT FISHER may have had a change of leadership but, judging by yesterday's results, the underlying picture remains much the same. The chairman Stephen Walls, like his predecessor Tony Millar, is confident there is no 'black hole in the company's balance sheet'. But, like his predecessor, he cannot guarantee a quick return to profits growth.
Mr Walls has gone through the motions expected of a new chairman. He has conducted an 'in-depth review' of the business, which resulted in a pounds 10m exceptional charge, is strengthening the management, and switching from acquisition to organic growth. But Fisher remains a commodity business, without the brand strength to resist recessionary price pressure, which means there is little Mr Walls can do about the appalling trading conditions he faces.
A glut of fresh produce in Europe - which meant the price of bananas in Germany, for example, fell by 50 per cent - halved profits from European produce to pounds 7.5m. Most of that was in the second half, when the group made just pounds 500,000 operating profits. With the European surplus unlikely to disappear until February, the first half of this year is unlikely to see much improvement.
In the US, the number of cases shipped fell from 48 million to 46 million, while average prices fell 4.6 per cent, leading to a drop in operating profits from pounds 18.9m to pounds 10.8m. The group did manage to generate pounds 28m cash from operations - partly by squeezing pounds 15m from working capital - but the cost of the final acquisition fling meant net cash fell from pounds 70m to pounds 30m. Combined with lower interest rates that means interest earned, down from pounds 14.2m to pounds 7.8m last year, will drop further this year.
Overall, pre-tax profits in the year to August fell from pounds 89m to pounds 52.1m while earnings dropped from 10.02p to 5.6p a share. But a pounds 23m extraordinary charge for withdrawing from the mushroom business - a graphic illustration of the potential cost of bad acquisitions - meant it had to transfer pounds 11.9m from reserves to maintain the dividend at 3.75p.
Analysts expect pounds 62m at best this year, giving a prospective multiple of six times earnings, and a yield - on a maintained dividend - of 11.7 per cent. That should underpin the shares at 42.5p but they are unlikely to advance far until Mr Walls produces results.
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