Report on Comparing the Performance of Bute Chemicals and Ramsden Breweries

Introduction:

Due to the large cash surplus in our company, we are comparing two companies — Bute Chemicals (hereafter referred to as BC) and Ramsden Breweries (hereafter referred to as RB).

Bute Chemicals plc.:

BC’s turnover and profit decreased from 2,914 to 2,882 (￡m) and from 652 to 626 (￡m) respectively, but its dividend increased by 2.5p from 11.2p to 13.7p. In addition, rumour has it that BC is now in a ￡6bn merger.

Ramsden Breweries plc.:

RB’s turnover and profit, on the other hand, increased from 3,680 to 4.609(￡m) and from 804(￡m) to 900 (￡m) respectively. Also, its dividend rose by 1p from 29p to 30p and EPS went up to 0.9p. Moreover, the drinks industry is set to grow by 12% next year. However, RB has decided to cut 500 jobs in their recent restructuring programme.

Recommendation:

It is suggested that we do not put our eggs in one basket. Therefore, it would be better to invest in both companies. However, with the expected growth in the drinks industry, it would advisable to invest a higher ratio of the cash surplus in RB.

Writing pods: Jason, Yi Hsin, Hayes