Investment: BICC shake-up leads to 200% rise in losses
Thursday 11 March 1999
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."
Exclusive: World’s most pristine waters are polluted by US Navy human waste
Missing Malaysia Airlines Flight MH370: Any terrorist seizure of the plane ‘would have required one hell of a piece of planning’
Croatia's second city to close 'worst zoo in the world' after reports of 'nightmare' conditions and 'depressed' animals
Missing Malaysia Airlines Flight MH370: Hijackers, pirates or suicide – the theories surrounding the mystery
Missing Malaysia Airlines Flight MH370 Q&A by Simon Calder: How far could it have travelled? Who was responsible and what would their plans be? And how can a plane just vanish?
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
The rise of Ukip: Study warns Labour that Eurosceptic party's electoral base now 'more working class than any of the main parties'
Europeans have ‘got whiter’ due to natural selection in past 5,000 years, scientists say
Tony Benn was entirely ineffectual - and usually wrong
- 1 Is your name now 'banned' in Saudi Arabia?
- 2 Exclusive: World’s most pristine waters are polluted by US Navy human waste
- 3 Gender-specific books demean all our children. So the Independent on Sunday will no longer review anything marketed to exclude either sex
- 4 Missing Malaysia Airlines Flight MH370: Jet ‘hijacking’ began soon after take-off
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: **...