Account gamble
Focus on Ferro
John Bull
The results from Ferro Metal and Chemical Corporation towards the end of this month will draw attention to a very interesting situation. On trading grounds alone, however, there is not a great deal to go for in the year to September 30, in view of the sharp fall in profits which seems likely. In the first six months, in fact, pre-tax profits dropped from £135,000 to E76,000. Also, this profit included exceptional items -of E17,000 It would thus seem optimistic to expect that the chairman's forecast made this time last year, of an improvement over 1971 when £234,000 was made, will be achieved..
This gloomy outlook appears to be adequately reflected in the share price, however. Currently, Ferro stands at 56p against a 1972-3 high of 81p. But what is not reflected in the price is the prospect of a much brighter current year's trading and the acquisition of a stake In Ferro by a US company.
In the first instance, with its business in electro-plating, metal finishing, merchanting of ores, metals, and minerals, chemicals and pharmaceuticals, economic conditions should have moved in its favour. On the second point, Greg-Gary, a US company, has bought a 19 per cent holding in Ferro and has an option on a further 9 per cent. Whether Greg-Gary has any further intentions to in crease its stake, I would hazard no guess. However, the link does look both logical and beneficial for Ferro. Last year the group exported 46 per cent of its 2i million overseas sales to the USSR and 27.7 per cent to the US. Now Greg-Gary is one of the first companies to enter into a two-way trade agreement with Russia.
On all counts, Ferro looks a good share for the next account. And I hope that it performs as well as my recent speculation in Dixon's Photo graphic which came out with cracking good results last week.
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