Mr Brookes also has the financial firepower to expand in Asia before the export-led recovery he expects in the region gathers paceThere are risks. In the six months to June Bowthorpe managed an 18 per cent jump in operating profits on an 11 per cent increase in sales. Then investors got the jitters and the shares slipped to almost half their 604p high. The chief executive of Bowthorpe gets almost unanimous approval for the changes he has made at the electronics group.
He’s reorganised the business into five global divisions, cut costs, beefed up spending on capital equipment and research and development, and shared more information with the City
Until the beginning of June everything was fine. They shed another 34p to 323.5p yesterday as analysts downgraded their full-year profit forecasts to pounds 94m.
At first glance, this looks harsh. Helped by its geographical spread, the company is doing exclusive deals with travel groups such as Airtours to provide rental cars for holidaymakers. It is also supplying replacement cars to people who suffer a roadside breakdown.Meanwhile, chief executive Alun Cathcart thinks city dwellers will increasingly turn to renting cars rather than bothering with the expense of buying one.On upgraded full-year profit forecasts of pounds 94m the shares, up 22p to 223.5p yesterday, trade on a forward earnings multiple of 18.Avis looks capable of yearly profit growth of 10 per cent for the foreseeable future The recent weakness in the share price is an opportunity Buy.. YOU HAVE to feel for Nick Brookes. Interim figures from the group, released yesterday, show little evidence of a slowdown. In the half year to the end of June (Avis is in the process of switching its financial year end) revenues rose 8 per cent to pounds 252m while operating profits were up by a quarter.Avis pushed through its first price increase in three years while increasing volumes by a tenth.
Improved productivity lifted margins by almost three percentage points to 19.5 per cent.On resale values, Avis doesn’t worry because it sells over 80 per cent of its cars back to the manufacturer at an agreed price.It looks as if, true to its corporate slogan, Avis is trying harder.Longer-term trends are also working in its favour. At the end of June the company’s net assets were around 370p a share The trust said a number of parties had shown interest. IF PREVIOUS economic cycles are anything to go by, the car rental industry should be getting ready to slam on the brakes. Renting out Ford Mondeos to travelling executives is a cyclical business.
Given the general economic slowdown – not to mention the problem of plunging used car values – it’s no surprise shares in Avis Europe have dropped by a third since the beginning of June.
But hang on. The group’s shares were firm on HSBC’s decision to start producing research on the company. No doubt it was merely a coincidence that on Monday Zergo clinched a pounds 300,000 contract with Midland Bank, part of HSBC.. Because of a conflict of interest, ABN Amro is no longer the company’s stockbroker, replaced by West Merchant Bank.ZERGO, an electronic information group, firmed 10p to 265p, a long way from the 476.5p peak hit when information technology shares enjoyed the top of their bonanza this year. It made encouraging noises about its Gigante drill in Colombia, saying a positive outcome is expected in two weeks.
Talk in the market suggests that a 1.2 billion barrel field has been discovered, which could be worth 23p an Emerald share.SEAQ VOLUME: 943.4 millionSEAQ TRADES: 57,121GILT INDEX: 111.01 -0.55NATWEST Enterprise Trust, a venture capital group where National Westminster Bank is the biggest shareholder, jumped 30.5p to 304.5p, a peak, as possible predators made their presence known. They have climbed from 15p on Monday, when BancBoston Robertson Stephens put a 50p target on the shares.Emerald Energy held at 9.25p. The shares were floated at 125p in February last year.Euro Sales Finance, providing finance to small and medium sized companies, slipped 7.5p to 280p after duly reporting profits of pounds 1.36m against pounds 563,000 and disclosing plans to move from AIM to a full listing.Memory Corporation’s run continued, with the shares moving ahead 6.5p to 28p. Safeway, Somerfield and J Sainsbury ended a little lower.Brake Brothers, supplying convenience food to caterers, was roasted 112.5p to 635p after making what the market regarded as a profits warning.