Gloom grips building groups
Tuesday 05 September 1995
Deputy City Editor
The fragile state of the UK construction market was confirmed yesterday by gloomy comments from two of the industry's largest companies. Shares, already some of the stock market's worst performers this year, tumbled across the sector.
Rugby Group, the cement, joinery and steel group, had warned in July that trading conditions were deteriorating but the company's frank admission that last year's recovery had stalled knocked another 3p off its share price to 102p.
Announcing a rise of just 1 per cent in first-half pre-tax profits to pounds 36m (pounds 35.6m), the company commented: "Trading for the remainder of the year is likely to be difficult. The downturn in the UK construction and housing industry is well documented and little improvement in the short term is expected."
CRH, the Irish building materials group, announced strong growth in profits, up 42 per cent to Irpounds 56.8m, but confirmed the dreary picture at its British operation: "We thought there would be a 1 per cent increase in the UK building materials market. Officially there's a 2 per cent decline, but we feel it's a bit more than that." CRH's shares slipped 14p to 430p.
The bleak outlook painted by Rugby and CRH followed recent profits warnings from the housebuilders Wilson Bowden and Persimmon, and the appointment yesterday of receivers at Donelon Tyson, the small construction company. Their comments are viewed by analysts, however, as just the start of a depressing reporting season for all construction-related companies.
Investors are braced for further bad news this week when some of the industry's leading companies report half-year profits. Wimpey's results today will be followed later this week by Amec, one of the biggest contracting businesses, and Blue Circle on Thursday.
The industry's problems are across the board. The travails of the housing market have been widely reported, with stagnant selling prices squeezing margins. That in turn has started to affect the materials companies that supply the builders.
There are also widespread concerns over the road-building programme, where many contracts are due to be completed this year with few in the pipeline to replace the lost work. Many companies blame the Government's private finance initiative, which was supposed to provide additional work for construction companies but has so far failed to even replace projects shelved by Treasury cutbacks.
Oscar Pistorius trial: Paralympian sick again after photographs of Reeva Steenkamp's body are shown in court
Arrest made after man is found by the side of the road with his penis cut off
Malaysia flight MH370: Pitbull song lyrics bear uncanny resemblance to missing plane mystery, according to YouTubers
Missing Malaysia Airlines Flight MH370: Focus shifts west as Indian Ocean becomes latest search area for the aircraft and its passengers
Jeremy Paxman reopens war of words with Michael Gove over the WW1 centenary: 'A charlatan' who scores 'cheap political points'
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
Europeans have ‘got whiter’ due to natural selection in past 5,000 years, scientists say
Fracking is turning the US into a bigger oil producer than Saudi Arabia
How climate change helped Genghis Khan: Scientists believe a sudden period of warmer weather allowed the Mongols to invade with such success
- 1 Arrest made after man is found by the side of the road with his penis cut off
- 2 Girl found in the Amazon rainforest with neighbour Grover Morales after going missing for 7 months
- 3 Tim Berners-Lee on creating the web: 'I never expected all these cats'
- 4 Malaysia flight MH370: Pitbull song lyrics bear uncanny resemblance to missing plane mystery, according to YouTubers
- 5 First Kiss viral video was just a clothing advert starring actors
iJobs Money & Business
£35000 - £43000 per annum + Bonus and Benefits: Harrington Starr: A global lea...
£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...