Tuesday tips round-up: Dairy Crest, Graphene Nanochem

Alexander Bueso Sharecast | 07 Oct, 2014 07:33 - Updated: 08:17 | | |

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11:24 28/06/17
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The drop in commodity prices is hurting dairy processor Dairy Crest, piling the pressure on the farmers which supply it. The company has been forced to cut its payments to them thrice since July – with another reduction expected in November.

Cream and skimmed milk powder prices, for example, fell by 15% in August alone.

However, the company’s well-signposted long-term restructuring programme is paying off. For one, its focus on its four core brands has seen their combined sales outstrip that of its rivals. The plan to lop off £20m in costs is also on target. The firm has also made a foray into the high-end market for ingredients used in baby-formulas.

Combined with those milk price cuts all of the above initiatives provide the company with a promising longer-term outlook.

“This is a company managing its costs tightly and also investing in high-growth areas and brands. Buy,” says The Times’s Tempus.

Graphene is a potentially revolutionary material but companies are still trying to understand and exploit all the commercial opportunities which it opens up. AIM-listed Graphene Nanochem is a case in point.

The Malaysia-based outfit is looking to generate sales from grapheme-enhanced products, as well as from biofuel additives which do not include the new material. On 30 September the company warned on contract delays, sending its shares crashing.

The problem arose with its attempts to sign on a graphene-enhanced biodegradable drilling fluid. Yesterday, however, the company disclosed a second order with Scomi Oiltools for its enhanced drilling fluid, PlatDrill, for three times the size of a previous contract. Even so, the firm now expects to turn a loss for the full-year, while its cash has kept declining.

“Graphene Nanochem is definitely one to watch but until we have greater clarity on profits no better than a hold,” writes The Daily Telegraph’s Questor.

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