The bill for rationalisation plunged BBA from pre-tax profits of pounds 47.4m into losses of pounds 12.8m. As promised at the time of its pounds 126m rights issue a year ago, BBA is paying a maintained total dividend of 7.5p for 1993 but has now decided to cut 1994's payment to 4.5p.
Retrenchment at BBA, which shed 1,000 jobs in 1993, reducing its workforce to 20,700, has been accelerated by the appointment four months ago of Robert Quarto, formerly of BTR, to take over as chief executive from Dr John White who retired because of ill health.
BBA's shares dropped 19p initially yesterday but recovered to close 9p lower at 207p.
Most of the job losses will be in the company's European automotive companies, although the UK will also see redundancies.
Mr Quarto said sales to BBA's Continental European markets, mainly Germany, had fallen by 25 per cent in 1993 and were expected to drop by 10 per cent this year.
Mr Quarto said the rationalisation programme, which involves redundancy payments of almost pounds 60m, would pay the company back in less than four years.
He said BBA had to cut costs to a level at which the company could deliver sustainable margin improvements. The aim was to push margins, currently at 6.3 per cent, into double figures within two or three years.
'Dividends have to be earned before they can be distributed,' he said. 'Even excluding exceptional factors, the 1993 dividend is covered only 0.7 times by earnings. We now have a sound base for sustainable dividend increases over the medium term.'
He said BBA would not hesitate to make appropriate disposals where companies did not have critical mass in international markets or offer high returns in niche sectors. Last week BBA sold three companies for pounds 25m.Reuse content