It is tempting to conclude from today’s trading update from Aga that the former engineering conglomerate has disposed of its better half.

As shown by yesterday’s outbreak of a bidding war for Enodis, the credit crunch appears to have left the catering equipment market unscathed. Unfortunately, it is a market which Aga has already quit, having sold its foodservice division to Italy’s Ali last year for £260 million.

The benefit of that demerger is that Aga — which in the third name change in seven years will now be known as Aga Rangemaster — is returning part of the proceeds, some £140 million, to shareholders through a 121p a share special dividend this month.

The concern is that what remains — an upmarket cast-iron cooker business comprising Aga, Rangemaster and Rayburn, together with the Fired Earth tile retail chain — is sorely exposed to a consumer downturn. In what the company describes as “mixed” trading, sales in the UK are flat and “very weak” in Ireland, which accounts for about 15 per cent of revenues. As a whole, it notes that the value of cooker sales has fallen this year in most international markets. The reassurance is that Rangemaster orders are up 5 per cent, and that higher prices are helping to offset falls in volume.

But with Aga’s core customers reining in big-ticket spending and the housing market slowing, it is difficult to see 2008 as being anything other than difficult. Higher steel prices are also unhelpful.

The imminent return of capital provides a short-term floor under the shares, as does the 25 per cent stake held by Edmund Truell, the pensions buy-out specialist. But at 293p, or 11 times this year’s earnings, those are insufficient reasons to hold on. Sell.

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