Companies: STT   

Unloved recycling container supplier Straight fell further following a pre-Christmas warning that 2007 profits were likely to be ‘materially’ below market forecasts.

While the core ‘trade’ business remained robust, growing throughout last year, Straight was hit by timing issues related to a number of large contracts (at the behest of customers), meaning that some of the business forecast to fall into 2007 will now be delivered in 2008. Furthermore, tough trading in retail and gardening markets, caused by exceptionally wet weather earlier in the year, continued into the second half, further impacting the group’s financials.

Although the earnings alert disappoints short term, Straight, formed in 1993 by chief executive Jonathan Straight, remains a rather inspirational and compelling long-term story, having evolved from a one-man operation into the UK’s number one supplier of kerbside recycling boxes and a key supplier of waste and recycling containers that help individuals, businesses and organisations reduce their carbon footprint.

Moreover, though the company currently sits on higher levels of stock than it expected, it continues to throw off cash and claims to have ‘invested a record amount’ in new products, ‘some of which are already generating business’, with others set for launch this year. Orders for 2008 are apparently strong and management expects major contract wins to boost order book levels.

Therefore, Straight, which grew its profits by 15% to £1.7m in the face of a challenging 2006, remains one to watch. But with uncertainty surrounding the short-term picture, the shares are probably best avoided for now.

Growth Company Investor is the UK’s leading authority on small-cap and AIM companies. You can gain immediate access to all the recent share recommendations with no obligation, with a free 30-day trial. Click here to join today.

Straight	AIM	£3.79m	33.00p	-1.00p
Click here for interactive charting
Other company articles:
Straight to the bottom line			15/10/2008
Straight			03/01/2008
Straight			27/03/2007
Straight			04/04/2006
Straight			30/09/2005