BICC joins the flight from house-building
Thursday 17 August 1995
Deputy City Editor
The house-building industry was dealt another blow yesterday when BICC, one of the larger players in the market, admitted it was looking to dispose of its 700-homes-a year business. The planned sale by BICC of its Clarke Homes subsidiary follows similar pull-outs by Tarmac, the UK's second- biggest housebuilder, and several smaller operations.
Sir Robin Biggam, chairman, said BICC had received a number of approaches from interested parties but denied he was close to a deal. The division, which boasts a 3,000-plot land-bank, is understood to have net assets of about pounds 100m. Raising that much would make a marked reduction in group borrowings, which rose from pounds 299m at the end of last year to pounds 409m at the beginning of July.
The planned disposal of the housebuilding operation came as BICC announced a 5 per cent fall in pre-tax profits for the first six months of the year from pounds 63m to pounds 60m. Earnings per share fell more sharply from 9p to 6.5p and the dividend was cut by a third from 6p to 4p. That was in line with market expectations following the decision to slash last year's final payment by 35 per cent to 8.6p.
The withdrawal from housing is the latest in a string of bad news for an industry struggling to reconcile falling selling prices with rising raw material costs and a speculative land price bubble last year which has squeezed already wafer-thin margins.
BICC's shares, which have underperformed the rest of the market by more than 20 per cent since the beginning of 1994, fell a further 5p to 320p as investors focused on a gloomy assessment of trading conditions in both cables and construction, persistent problems in Germany and rising raw material prices.
Sir Robin warned that more job losses would be needed at KWO, the German operation which was acquired in 1993 and lost pounds 15m in the first half-year. Trading in Germany was hit by cheap imports from Poland and other former eastern bloc countries and the cost of laying off 400 workers in the six month period.
Elsewhere, the North American cables operation is improving although Sir Robin admitted that its return on capital employed was still unacceptable. In Australia, a downturn in the housing market was starting to affect trading.
In construction, profits remained under pressure following further declines in the UK contracting industry. Earlier this week, figures from the Department of Environment showed an 11 per cent decline in new construction orders in the past three months as the Private Finance Initiative failed to make up a shortfall in government spending.
Balfour Beatty continued to push for overseas work to compensate for the weak UK market, pushing the foreign content of its pounds 1.7bn order book to 44 per cent, up from 28 per cent last year. Large orders included a share of the new Hong Kong airport terminal building.
- 1 Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
- 2 Rarest Beanie Baby of them all could be sold for £62,500 on eBay
- 3 Driving while dehydrated can be just as dangerous as drink driving, study suggests
- 4 Ben Affleck asked TV chiefs to hide slave-owning ancestry, new hacked Sony emails published by Wikileaks claim
- 5 Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
Alan Rickman admits editing 'terrible' script with friends in Pizza Hut behind backs of writers on Robin Hood: Prince of Thieves
Rarest Beanie Baby of them all could be sold for £62,500 on eBay
Professional big game hunter Ian Gibson crushed to death by elephant during hunt
Ben Affleck asked TV chiefs to hide slave-owning ancestry, new hacked Sony emails published by Wikileaks claim
Farmer told to tear down mock-Tudor castle after hiding construction behind hay bales
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...