Investment: Mixed bag for ED&F Man

ED&F MAN, the commodities turned financial services group delivered underlying profits of pounds 55.3m in the six months to the end of September, an increase of 39 per cent. But a storming performance from asset management and the brokerage business was offset by a poor result from agricultural products and triggered a 10p fall in the shares to 299.5p.

Asset management, which includes offshore investment products aimed at wealthy individuals, generated pounds 45.2m including substantial fee incomes based on successful investment performances. The brokerage business which handles financial futures and foreign exchange as well as energy and metals contributed pounds 10.7m before exceptional costs of pounds 1.3m on two new acquisitions.

But profits from agricultural products slumped to pounds 700,000 from last year's pounds 16.8m at the same stage, suffering heavy losses in sugar and alcohol. Only the ingredients division did well, producing a profit of pounds 7.9m, up 20 per cent on the previous period.

It is hard to see a quick recovery in the agricultural products side although, traditionally, there is a bias in favour of the second half. Financial services are also recession-prone, and it is hard to see further exponential growth, but this company is unique in its sector serving high net worth individuals, and it depends relatively little on the prospects for the UK economy.

Forecasts for the full-year are unchanged at pounds 116m and earnings of 31.5p in the current year, rising to pounds 133m and earnings of 34.6p next year. At less than nine time forward earnings the shares look a tempting gamble.