Wagon rolls into restructuring

Wagon Industrial Holdings may be forced to seek cuts in its retail systems operations. With £35m set aside for restructuring, measures are likely to prove drastic. New chairman David Kendall will not give details before the 1997 figures are announced in July. But analysts believe his stated aim to focus on `good growth engineering prospects’ […]

Wagon Industrial Holdings may be forced to seek cuts in its retail systems operations.

With £35m set aside for restructuring, measures are likely to prove drastic. New chairman David Kendall will not give details before the 1997 figures are announced in July. But analysts believe his stated aim to focus on `good growth engineering prospects’ precludes boosting the retail side.

Supermarkets, the main customers for Wagon’s refrigeration systems, shelving and checkouts, are not in an expansive mood. So the business, in which Wagon is market leader, is set to stay highly competitive and flat.

Nor do `good growth prospects’ appear to apply to the Continental Europe storage business where Wagon’s Polypal activities are under heavy competitive pressure. Over the years, Wagon has piled up a diversity of automotive interests on widely scattered sites. Analysts predict considerable `tidying up’, with the sale of some businesses, merger of others, and closure of a number of sites.

The group is believed to be happy with most of its precision engineering portfolio, although some activities may be merged.

Link 51, Wagon’s highly profitable UK storage products business, is not expected to be affected by the restructuring.

Wagon’s shares came back sharply on the announcement of the restructuring review, although the City feels that Kendall is firmly grasping the nettle and that Wagon will duly `build as a reshaped engineering group’ as he forecasts.