Paper profits
John Bull
The interim figures of Walmsley (Bury) are due shortly. They should show that the group has made good progress and with possible encouraging noises about the future, I feel that the market will sit up and take notice of this pulp and paper machinery manufacturer.
Walmsley last reported for the full year to September 30, 1972 and in that period pre-tax profits were slightly lower at £2m., though comparisons are rather meaningless as the previous figures covered fifteen months.. The 1972 results were also depressed by substantial provisions to cover unprofitable contracts. These provisions totalled E486,000. Another adverse factor was an elevenweek strike of all UK production workers though this was settled in October. It is worth noting that
margins took a hefty tumble — turnover rose from E29.5m to £44.2m — because of policy changes. Walmsley is now ready to contract for the supply of associated equipment from outside the group and this business is of course of lower margin content.
So we have a situation which looks ripe for improvement, purely on the grounds that last year was a very difficult year. However, there is more to it than that. The order book position is recovering and margins should improve, helped by rationalisation. On this score, Walmsley has not' been dilatory in closing down unprofitable operations. It will be interesting toO, to see the impact the Italian company has on results. This concern has apparently booked some useful orders. Last year adjusted profits were in the region of £60,000.
Manchester brokers, Henry Cooke, are going for pre-tax profits this year from Walmsley of £1.75m though they do feel it wise to allow for a further £200,000 provision. Even on this conservative basis earnings per share are 14.2p. So, at the current price of 152p the PE ratio is 103. This is also a good income share with a 7.9 per cent yield.
In conclusion I am pleased to note how successful were my recent recommendations, K Shoes and Averys. Against 85p and 120p respectively, the shares now stand at 95p and 134p.
First dealings
Last Account dealings day
May 14 June 4 June 18 June 1 June 12 June 15 June 26 June 29 July 10
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