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Brown & Tawse restructuring to cut losses

BROWN & TAWSE, the steel and pipes distributor, is to undergo a radical restructuring in an attempt to stem losses, writes John Murray.

The company said losses would be worse than expected for the year to 31 March at pounds 8.9m, and that the restructuring would cost an additional pounds 10.9m.

Under the plan devised by Richard Wilson, the new chief executive, Gilbert Black, chairman, is to be replaced by Donald McFarlane, chairman of Senior Engineering, and James Dickie. Mr Wilson was brought in from GKN in October with a brief to turn around the company, which lost pounds 2.8m in the six months to 30 September.

His restructuring also involves bringing in new management, selling non-core activities and rationalising the distribution network.

Mr Wilson said the plan would lead to between 150 and 200 job losses, bringing the total number of employees down to about 1,000. 'We've got to enhance margins through better buying and more aggressive selling,' he said.

Cost savings of pounds 4.5m in a full year and margin enhancement of pounds 2.5m over two years were expected, he said.

The pounds 10.9m provision is to cover the pounds 5m costs of decommissioning the group's computer system and property write-downs.

The group's borrowings will stand at 85 per cent of the pounds 24m net asset base after the restructuring. Mr Wilson said the company's bankers had approved the shake-up and the company would not need fresh finance.

The shares fell 2p to 61p.