LONRHO surprised the City yesterday when it warned that half-time profits would be down by around a third.
In a terse statement, the conglomerate said the strength of sterling, poor precious metal prices, lower profits at the Ashanti gold mining operations and moderate returns from the African trading businesses would affect the results for the six months to March 31.
One analyst who has been following the company for more than 20 years said the statement was disappointing after two or three years of profits recovery. He added that Lonrho has had to work very hard because of the downturn in the gold and platinum prices but said the second half should be level.
He said the appointment of Sir John Craven as chairman - he holds the same role at Deutsche Morgan Grenfell - was a positive move which would lead to progress and the delivery of value to shareholders.
City reaction was to knock 12!sp off the shares for them to close at 145p. This compares with a range in the past 12 months of 115p to 219p.
Lonrho's chief executive, Nicholas Morrell, is expending a great deal of energy trying to de-merge the African trading interests from the mining activities, while selling off the UK manufacturing activities. He has already disposed of Harrison & Sons, the security printing business, to De La Rue, while Cramlington Textiles, the former Brentford Nylons, is another candidate for sale.
The biggest problem in the short term is to find a buyer, or buyers, for the Princess Hotels chain. It is concentrated in the US and Caribbean and discussions with Middle Eastern buyers are dragging on.
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