German builders keep RMC solid
Continuing decline in the sector's volumes and margins cut interim operating profits at RMC's UK businesses to pounds 8.8m in the half year to 30 June, down from pounds 19.2m in the same period of 1991.
The German construction industry continued to be buoyant. Operating profits in the wholly owned businesses in western Germany rose to pounds 40.5m from pounds 32.1m. The RMB associate in eastern Germany broke even.
Profit before tax fell to pounds 62.1m from pounds 69.9m and was at the bottom end of City analysts' expectations. Turnover rose to pounds 1.4bn from pounds 1.28bn.
A reduction in operating profits in the rest of the EC was attributable to a decline in France and Spain, where profits fell from pounds 28.6m to pounds 23.6m.
Earnings per share declined from 15.5p to 12.1p. But the dividend is being held at 6.6p.
Jim Owen, managing director, said he expected UK volumes to continue to decline in the second half. But he was confident of the trading position in Germany where a pick-up in the east should compensate for any fall-off in the west. 'We see any downturn in the west being made up and improved on by any improvement in the east at the operating level,' he said.
He did not believe, however, that RMC could still hope to match 1991's pre-tax profits this year, although the rise in the German mark against sterling would help.
Despite tough trading conditions, Derek Jenkins, finance director, said net debt at the year end should be at least pounds 10m lower than last year. Gearing should be reduced to about 32 per cent from 35 per cent.
Job losses continue. The total workforce has fallen by about 2,500 from 15,000 in 1989. But the rate of rationalisation is slowing.
The shares rose 34p to 443p.
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