BM to cut staff in bid for survival

Click to follow
The Independent Online
INVESTMENT analysts gave BM Group, the construction equipment manufacturer and distributor, only a 50/50 chance of survival yesterday after a slump in interim profits of 47 per cent, writes Robert Cole.

The company is to shed more than 1,000 jobs in its efforts to survive.

It also admitted that provisions against losses, incurred as new management tries to make sense of the over-expanded group, would be at least pounds 42m.

Taxable profits fell to pounds 13m from pounds 24.6m for the six months to 31 December.

Earnings per share were 4.3p, against 14.9p, and the dividend was just 0.5p compared with 2.1p.

The pounds 42m provision will push BM into the red by as much as pounds 35m.

The Midlands company is struggling under pounds 105m of bank borrowing and finance leases, equivalent to 100 per cent gearing. In addition, it has obligations on another pounds 41m, mostly stock.

BM said yesterday that it would sell its 75 per cent stake in BB&EA, the building products company that was formerly a subsidiary, in the hope of raising pounds 20m.

BM grew under the chairmanship of Roger Shute, who resigned suddenly last summer on health grounds. He steered the over-ambitious acquisition programme, funded using BM shares.

Shares fell from a peak of 429p in October 1991 to 90p last summer. Yesterday the stock plumbed new depths, down 5p - or 14 per cent - to 31p.

Comments