While the rising tide of stock market values has lifted even some leaky boats, there have been exceptions, particularly those vessels which the market perceives as being holed below the water line. A case in point is industrial holding company James Crean, whose shares have fallen from a high of 240p last year to 155 yesterday. This week a further grim profit warning was issued to shareholders, advising that Crean could announced exceptional losses of £7.2 million for 1977 due to costs associated with asset disposals and restructuring.
In the letter, the chairman and chief executive Ray McLoughlin warns that a "significant fall" in profits may lead to more of the group's businesses being sold. "Strategic investors" are being sought as part of corrective action to return the group to acceptable profitability and tough decisions will be taken to restore shareholder value. Manning the pumps may involve further sell-offs and a further narrowing of the business base.
Crean operates three divisions, print and packaging, a US-based food operation and British-based electrical interests. The fall in 1977 profits was attributed to trading difficulties in Britain and the US, as well as loss of profits from companies sold off during the year. Crean's annual results, expected around the end of March, may see annual pre-tax profits of £14.6 million tumbling to somewhere between £5.3 million and £7.4 million. While the pumps may be working, the vessel is clearly low in the water. Existing investors remaining on board would be advised to at least reach for the life jackets.
