How- ever, yesterday the stock market's response was to mark the shares down 7p to 387p, as worries lingered over the group's ability to ride the paper cycle.Analysts are fretting over two immediate problems. Half-year figures released yesterday show pre-tax profits creeping up from pounds 52.2m to pounds 55.3m, with earnings per share rising 7 per cent to 12.3p in the six months to June. Stripping out the remaining construction activities - set to go by the year-end - operating profits jumped 36 per cent to pounds 55.8m.To crown Mr Teare's labours, China Clays has announced the first rise in the dividend since 1991, hoisting the interim 2.8 per cent to 5.5p. These changes have tended to distort the underlying picture in the past but, with the restructuring almost complete, the fruits are starting to ripen. Out have gone most of the building materials business, demerged as Camas in 1993. In have come speciality chemicals, mainly through the $302m (pounds 201.3m) acquisition of Calgon in the US two years ago. A break-up of the group would push them higher, but with Sir Geoff Mulcahy at the helm, this is not on the agenda.NatWest Securities is forecasting profits of pounds 275m for the year, which puts the shares on a forward price-earnings ratio of 16 Expensive.. English China Clays, the kaolin and paper chemicals group, has been thoroughly reshaped over the past five years under Andrew Teare, chief executive.
Without it, retail profits of pounds 33.5m from sales of pounds 1.75bn would be a pathetic return.The shares have recovered some of the ground lost since last year's spectacular decline and put on a further 19p to 483p yesterday. It achieved a 12 per cent increase in profits and now accounts for more than half of group profits. It has reversed a sales decline, but increased half-year losses to pounds 8.7m because of investment in the stores.Market share is still declining and poorly-located sites remain a problem.Kingfisher can thank its lucky stars it bought Darty, the French electrical retailer, that is proving mercifully resilient. Woolworths is improving under the tutelage of Roger Jones and operating losses of pounds 6.9m last year were reduced to pounds 0.9m in the six months to July, traditionally the weaker period for the group.Higher sales are being achieved through the elimination of operational errors such as the poor stock control that dogged the chain last year.The belated introduction of electronic point-of-sale systems is improving efficiency and there has been an improvement in like-for-like sales of 7 per cent, although much depends on Christmas.Comet seems almost as bad as it was. Although the 16 branches of Warehouse are doing well, increasing like-for-like sales by 11 per cent, the others are struggling. It appears that one format is cannibalising the other.Elsewhere, the picture is less gloomy, though hardly yet an invitation to buy the shares. There is no escaping the continuing sluggishness of the housing market.But B&Q has succeeded in making a difficult situation worse.
Under an ambitious "twin-track opening strategy", it is opening more of its mega- sized Warehouse formats while persisting with its standard- sized B&Q outlets. Recent figures from Do It All, the Boots and WH Smith venture, were just as bad. Just as those businesses are back on the road, B&Q's hub caps have spun off. To be fair, Kingfisher is not the only one suffering from the DIY blues. Kingfisher looks worryingly rickety as it splutters along the high street - just as one wheel is bolted back on, another vital part falls off. At the beginning of the year a profits warning and boardroom clear-out showed the need for urgent repairs at Woolworths and Comet. Keeping the yen below 100 to the dollar is in everybody's interest..
Even though a weaker yen will ease competitive pressures on Japan's exporters, it will enable the structural shift in the economy to continue without so much pain that special interest groups can call a halt to the process. For the metaphor hungry, last week's earthquake only briefly halted the bullet trains in Kobe.The other implication is that it is in the interests of both Japan and the US to stop restructuring from being derailed by a lurch into recession and financial crisis. It cites US telecoms deregulation as a valuable model.This suggests understandable foreign doubts about Japan's commitment to deregulation and opening its markets are likely to be overplayed - although the process of consensus-building is incomplete. ``To ensure freer entry to and exit from industries as well as to enhance a dynamic change in Japan's industrial structure, deregulation has a crucial role,'' the review says. Workers and capital must be encouraged to switch from declining to growing industries.