Investment: BICC shake-up leads to 200% rise in losses

BICC, the troubled cables and engineering group, yesterday showed the scars caused by 18 months of restructuring with a 200 per cent increase in pre-tax losses. The company shed several poorly-performing units and lost more than 2,000 jobs during the period in a bid to buck tough conditions in the market for industrial cables.

Alan Jones, the chief executive, said the action would yield benefits this year. "There has been a mammoth amount of restructuring and radical action; now we have to grow our profitability," he said.

He said the sale of its optical fibre and telecom cables businesses would enable BICC to focus on Balfour Beatty, its profitable engineering and construction subsidiary.

He added that the company's power cable business was also set to contribute to the group's growth after years of underperformance.

The measures were behind a two-fold rise in 1998 pre-tax losses to pounds 94m on sales down 11 per cent to pounds 3.9bn. The figures were depressed by a pounds 106m write-down on underperforming assets in BICC's power cables subsidiary and a pounds 26m provision for the loss on the sale of its telecommunications cables division to the US group Corning.

Mr Jones dashed rumours of a bid for BICC, whose shares have slumped nearly 60 per cent over the past 12 months. The company has been seen as a takeover target since last year when the acquisitive mini-conglomerate Wassall acquired a 9 per cent stake. Mr Jones said he had no contact with Wassall or any other potential bidder and added that his sole focus was to grow the business.

But, despite the chief executive's protestations, many in the City think BICC might be the target of some corporate action. The company's share price and credibility have been savaged by the downturn in sections of the cable industry, and by its management's inability to respond quickly. The disaster in cables largely overshadowed the positive growth in Balfour Beatty, which managed a successful transformation from low-margin contractor into a high-growth construction services business.

As a result the shares, down 1.5p to 76.5p yesterday, are at rock-bottom levels, making them attractive to predators. However, as one analyst put it, the cable business is probably acting as a "poison pill" putting off bidders interested in Balfour Beatty.

To its credit, BICC's management, probably spurred on by Wassall, is now trying to address the problems and focus on the better businesses. "Everything they are doing is an attempt to remain in control of their own destiny," one observer said.

If a bid does not materialise, a spin-off of Balfour Beatty could also unlock shareholder value, and break-up valuations suggest that a two- part BICC would be worth around 120p a share. Whatever the outcome, the shares - on around seven-times expected profits of pounds 110m for 1999 - are on a low rating.

But, as one analyst said: "The shares are ludicrously cheap; the only risk is that BICC has always disappointed on the downside in the recent past."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police