MOLINS (MLIN) - 37p

Molins is best known for its involvement in the tobacco industry and it has very colourful roots in this field. The company actually started in Cuba, where Jose S Molins made cigars and hand rolling cigarettes in Havana in 1874.

He moved to London via America and in 1911 Molins’ sons, Harold and Walter, devised a machine which could make packets ranging from cigarette packs to large cartons for tea.

The Molins Machine Company was founded the following year and since that time there has been a wide range of operations around the world.

The company was listed on the London Stock Exchange in 1976 and throughout the 1980s there was a series of bids to take over Molins and a string of management changes.

More recently, from the mid 1990s onwards, there have been a number of acquisitions with varying degrees of success.

In 2003 the company acquired Sasib, an Italian manufacturer of packaging machinery for the tobacco industry, but the business was sold on in 2006.

The company is currently split into three operating divisions: Molins Tobacco Machinery designs, manufactures, markets and services specialist machinery for this industry.

There are three packaging machinery businesses. ITCM is based in Coventry and is a specialist engineering supplier, developing products and the associated production and packaging machinery. Langenpac, in the Netherlands, designs and manufactures cartoning machinery, case packers and robotic solutions. In Canada, Langen Packaging performs the same role and both Langenpac and Langen have the ability to provide complete turn key projects.

Scientific services, the smallest of the divisions, is made up of Arista Laboratories, an independent smoke constituent analytical laboratory, and Cerulean, which develops, assembles, sells and maintains process and quality control instruments for the tobacco industry.

Final results for 2008 were released at the end of February. Sales were £91.5m (2007: £89.3m) and profit before tax and exceptional items on continuing operations fell to £3.7m from £4.4m. Earnings per share on the same basis were 16.1p (2007: 18.0p).

It goes without saying that the current economic situation is far from ideal and this will have an undeniable impact on the business. It should be remembered that this is a business with a healthy balance sheet.

A recent property sale has virtually eliminated borrowings and this should ensure that Molins weathers the current storm.

Recommendation - BUY

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.