Bottom Line: RMC getting the mix right globally

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The Independent Online
THE pleasing aspect of RMC's interim figures is that everywhere seems to be going right at the same time. Germany has been a success story throughout the recession, but the market was caught on the hop by the extent of volume, price and market share recovery in the UK.

The company was rightly delighted with a 60 per cent increase in pre-tax profits to pounds 98.8m. Earnings per share were up an even better 84 per cent to 24.6p, and the dividend was increased by 6 per cent to 7p.

The real excitement in RMC is its dominant position in Germany, where it controls 16 per cent of the ready-mixed concrete market compared with less than 1 per cent for its nearest rival (in which it has a 25 per cent stake).

There seems little doubt that a 20 per cent return will be achieved on the pounds 500m investment in a cement works outside Berlin, twice the size of anything like it in the UK and on the doorstep of the biggest building site in Eastern Europe.

Elsewhere, France is finally on the turn, as well as smaller markets in the US, Spain and Israel, the biggest disappointment in the half year.

RMC is a wonderful generator of cash, spends it wisely, reads the cycles well and is extremely tightly managed. Despite money pumped into eastern Germany, gearing is set to fall next year to a very comfortable 25 per cent.

On Warburg's forecasts of pounds 252m this year and pounds 305m in 1995 profits are moving well ahead of the previous peak in 1989. The shares, up 19p to 927p, are on a market rating of 12 times expected earnings per share. Buy.

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