Shares digital

Uniq (UNIQ) – Finals PTP: -£44.1m (PTP: -£58.5m) Divi: 2.5p (5.2p)

Once regarded as a recovery stock with a good yield, these results dashed these hopes. The final dividend was passed. The company also indicated the recovery programme would last five years instead of three, as previously indicated.

The group is heavily committed to M&S (MKS), which generates almost 30% of its turnover. Although it has been made the ‘strategic partner’ in three categories, this is likely to involve Uniq in further investment.

One of the group’s long running problems is the loss-making Minsterley desserts plant. Although this achieved break-even in the fourth quarter, helped by good Christmas sales, the performance was still poor overall. Uniq had hoped to solve the problem of Minsterley by now. It has clearly failed to do so and will almost certainly have to downsize the desserts business.

The group, like other food processors, has struggled to recoup increased raw material costs. Unfortunately its retail customers have a stronger bargaining power. This situation could worsen still further.

The European businesses enjoyed mixed fortunes. The German business is still loss-making and the Dutch business suffered a ‘major fall in profitability’. In France there was a welcome return to profitability.

Although Duke Street, the venture capitalists, has a 6.6% stake, that is the residue of a previous failed bid. Duke Street is unlikely to return with another offer in the short term.

Having disappointed the market by passing the dividend and saying that recovery would be more protracted than earlier hopes, management has lost credibility with many.

Shares says: The shares are likely to remain under the cosh for some time.

by: John Marshall