OUTLOOK:UB falls victim to change

Ignoring the Government's opt-out from social policy two months ago, United Biscuits became the first British company to establish a Works Council to allow employees to discuss strategy and employment issues. Yesterday's announcement of 980 job lo sses at Grimsby will give it plenty to chew on.

The closure of KP's snack plant on Humberside underlines the pickle UB and the rest of the UK food manufacturing industry has landed in thanks to the enormous buying power of the big grocery chains. Combined with a relentless rise in marketing costs, this has continued to squeeze margins.

As they pick up their cards, the staff may not agree, but UB is clearly a better employer than an investment. Over the past five years its shares have under-performed the rest of the market by almost a third.

Profits in 1994, UB confirmed yesterday, will be no better than a year ago - ie,about £30m below those achieved in 1991 and the second-worst performance of the past six years. Pre-tax margins in 1989 were 8.4 per cent compared with 3.4 per cent in 1993 and the earnings cover for UB's high-yielding but firmly ex-growth dividend is getting ever thinner.

As candid as it is paternal, UB's management cheerfully admits that margins will never return to those achieved in the good old days, which, given the company's dominance of the UK snacks and biscuits market, really says something about the shift of power in the British food industry.