Blue Chip: BICC holds the power but the force isn't with it

BICC, the cables to electrical equipment group and a steadfast of the UK engineering sector, has found it an uphill struggle to maintain profitability in the face of determined competition at home and overseas.

Some hope was offered last week by the news that it had struck a deal with Delta, where the two concerns swapped assets, just to close them down. This scorched-earth policy makes sense, but it is too soon to say how it may benefit BICC.

In essence, Delta gets BICC's construction and building wire operations, while BICC gets Delta's power cable operations. BICC can then close down the operations it has acquired and concentrate remaining activities in rod and wire at its existing site on Merseyside.

This will leave BICC as the kingpin of the UK power cable industry, with a commanding market share. The plan is part of a much wider restructuring, which will cost a pounds 140m writedown in the 1997 accounts. It follows charges of pounds 65m in 1996 and pounds 176m in 1995.

Shareholders will be impatient to see some improvement after all this. The shares have slipped back from a five-year high of 460.5p in 1994 to its current low of 133.5p.

The Delta asset swaps are subject to approval from the Office of Fair Trading, although both sides believe they will get the green light on the basis that the deal must be assessed in the light of European-wide overcapacity.

Assuming it does go through, BICC could well see pounds 100m in unprofitable sales knocked off the profit and loss account. Even so, it is hard to see how this could improve margins to any great extent.

In an accompanying trading statement, BICC highlighted pricing pressure and trading weakness. Its German joint venture also continues to throw up problems. One plant has been closed and another is almost closed, although, encouragingly, BICC adds that local competitors are also cutting capacity.

Last - but with pounds 2bn of sales not least - is how Balfour Beatty the civil engineering business, can shape up. Despite its scale, profitability was running at a miserable half a per cent in 1996. BICC wants to pump that up to 3 per cent. But, again, it won't be easy.

Even if Europe comes good, there are potential problems lurking in Asia and Australia. The economic downturn in Asia could hit its businesses in Malaysia and Indonesia and cannot be good news, while Metal Manufacturers in Australia has issued a number of warnings over the past year.

Full-year results are due on 4 March. Until then, there is little to inspire purchases of the shares. Further ahead, however, it would be something of a miracle if the latest round of rejigging revives BICC's flagging fortunes. Avoid.

Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Those who were encouraged to walk in a happy manner remembered less negative words
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
ebooksAn unforgettable anthology of contemporary reportage
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London