IN a very full report to shareholders for the year ended December 28, 1963, Sir Kenneth Peacock, chairman of Guest Keen and Nettle- fold, makes quite clear the magnitude of their stake in steel and the consequent dangers arising from renationalisation of the group's steel interests. Last year these provided 23 per cent of the aggregate trading profits on a capital in- vestment of approximately £59.5 million, or 20 per cent of the balance sheet total. Three- quarters of the company's steel goes into its own finishing works. The group has a vast and com- plicated network of engineering companies, serving many trades including the motor-car industry. Last year group exports from the UK were a record at over £17 million. Trading profits jumped from £21.86 million to £23.94 million and the net profit was up from £4.88 mil- lion to £5.68 million. The dividend is increased from 16 per cent to 17 per cent from earnings of 36 per cent. A one-for-two scrip issue is pro- posed. The outlook for 1964 is distinctly more favourable than that of the past year and, come what may, I would rather buy than sell the ft shares, now 70s. 9d. yielding 4.8 per cent.
In spite of an increase in pre-tax profits from £3.4 million to £4.4 million from Booker Brothers McConnell for 1963, the 10s. shares. now 20s., have fallen to near the low for 1964. There is very good reason for this as about two-fifths of the group profits come from sugar-mostly from British Guiana. There cote ditions are far from happy, and strikes and a serious drought, added to a fall in the price of sugar since 1963, will seriously affect profits from this division. But, apart from the sugar and rum-distilling interests, the company 10 doing well. In fact, the chairman, Sir Joel( Campbell, predicts that the improvement In profits will be maintained in 1964 from the other divisions, which include engineering, the mane' facture of boilers and radiators and also print- ing. For the past four years the company has. paid a 10 per cent dividend well covered by earnings. At this stage I consider the lOs. share! at 20s. a good gamble in the hope that the dive dead will be maintained for 1964, as sooner er later the company will get over its sugar troubles.