View from City Road: Kenwood goes off the boil

'WE FLOATED in the nick of time.' So says Tim Parker, chief executive of Kenwood Appliances, which came to the market in June, basking in the City's post- election optimism. 'Just before expectations evaporated and everyone realised that the economy wasn't improving after the election. We were quite fortunate.'

But how fortunate are shareholders who bought at the float price of 285p? Since then, shares in the kitchen equipment company have underperformed the market by about 17 per cent.

In September, only three months after flotation, Kenwood warned an already jittery City of dismal July trading and the share price crashed 19p on the day to 219p. Yesterday its first set of interim results revealed operating profits down from pounds 5.8m to pounds 5.3m and pre-tax profits pounds 600,000 lower at pounds 5m on a like-for-like basis.

Mr Parker says he has learnt not to be preoccupied with daily movements in the share price. Indeed, the shares have made something of a recovery, rising a further penny yesterday to 256p. The interim dividend was 1.5p, as expected.

Improved trading in September, October and November augurs well for Christmas. Overseas trading, which accounts for 65 per cent of its turnover, was mixed: Scandinavia disappointed, but there were better performances in France, Austria and the United States.

Disappointment with the first set of results has shaken investors' confidence and they may not be prepared yet to give the company a second chance. Profits should reach pounds 9.5m or more this year, putting the shares on a multiple of 14 times prospective earnings. No bargain.

(Photograph omitted)