By Christmas the price had drifted down to about that level where it stood until the next press

By Christmas, the price had drifted down to about that level, where it stood until the next press release, this time trumpeting the launch of an online “search engine” that allows users to cruise the world- wide web on the Internet. Even if orders are currently 6 per cent ahead, there are signs of weakness in some of the main developed economies.Morgan is expected to turn in pounds 98m this year, which would put the shares, down 13p at 412p, on a forward p/e of 14 or 15 Fair value.. At 12 per cent, up from 10.5 per cent the year before, the group is close to its target of 15 per cent. Carbon, on 14.6 per cent in 1995, will be there this year, but at between 10 and 12 per cent, the rest of the group has a bit to go yet.Last year’s margins rode higher on the back of strong volume growth and price rises of up to 5 per cent, but Morgan’s main markets may have peaked, at least for the time being. In the short term, however, pounds 1.6m of restructuring costs and pounds 800,000 spent on a new laser cut operating profits from the speciality materials from pounds 17m to pounds 16m last year.Acquisitions, which chipped in pounds 5m, and restructuring helped Morgan’s other three division record healthy rises in profits and margins. A final dividend of 7.55p takes the annual total up from 13.1p to 13.8p, somewhat behind the rise in earnings as Morgan prudently increased the cover to two times.
With no more than 8 per cent of sales going to any particular industrial sector, the group was able to shrug off the weakening of the automotive and US defence industries as the year wore on. The slack was taken up by areas like chemicals, electronics and telecommunications.

Morgan’s diversification has allowed it to weather the loss of US defence sales in its Wesgo ceramics business and further restructuring in the electronic defence operations, now 70 per cent defence-related, should reap similar rewards. Stripping out the Holt Lloyd car polishes business, sold for pounds 57.5m in 1994, underlying fully-diluted earnings rose a chunky 22 per cent to 25.4p. Morgan Crucible’s decision to concentrate its resources on building strong positions in technologies serving a wide range of industries continues to pay dividends. Despite varying fortunes among its customers, the carbon brushes to metallurgical ceramics group still managed to raise profits another 17 per cent to pounds 85m in the year to 4 January.

The yen has weakened since last year, but political uncertainty has resulted in sales in Hong Kong, once one of the group’s most lucrative markets, diving by between 40 and 60 per cent this year. Toyota and the other big Japanese manufacturers are busy cutting costs and moving production offshore, but it could be another two to three years before the benefits become apparent.Assuming profits before disposals rise to pounds 165m this year, the shares stand on a premium forward rating of 16 Still unattractive.. Adding insult to injury, insurance and testing were the group’s only main divisions to raise returns last year.Inchcape’s problems are much more cyclical, however. Around 40 per cent of sales are dependent on the import of mostly Japanese cars and even their marketing appeal could not cope with the yen’s appreciation by around a third over the past three years. The European business seems to have suffered worst, slumping to a pounds 14m loss after an 8 per cent drop in volumes in 1995. But the extent of the problem is illustrated by the fact that in the rest of the world volumes were down 17 per cent, compared with a 19 per cent world-wide increase for other marques.Whether last year’s 36 per cent fall in pre-tax profits to pounds 147m, before the pounds 65.2m restructuring charge, marks the low point remains to be seen. Brokers suggest it will be lucky to pick up much more than pounds 500m for the pair, which means interest income of less than pounds 40m will replace combined profits of pounds 56.5m last year.