Investment: Blue Circle fights off Asian fever

BLUE CIRCLE, the building materials group, is meeting top analysts to warn them that 1998 profits will not meet some expectations, it emerged yesterday. The veiled profits warning caused a sharp slide in the company's share price, which shed 7 per cent in the two days.

The company's finance director, James Loudon, is engaged in a whirlwind tour of the Square Mile to brief 30 brokers ahead of the results announcement on 29 March. Mr Loudon is understood to have explained to analysts that a pounds 600m-plus acquisition spree in Asia in the second half of 1998 would hit Blue Circle's earnings in 1998 and this year.

In August the group bought out its joint venture partner in Associated Pan Malaysian Cement, Malaysia's leading cement producer, for pounds 185m. In October it acquired the second-largest cement maker, Kedah, for pounds 351m, followed by a pounds 135m swoop on a number of companies in the Philippines.

A source said: "We are explaining fully how our recent acquisitions are going to dilute earnings in the next couple years." The warning is believed to have prompted some analysts to consider cutting predictions for 1998 earnings by up to pounds 10m to about pounds 315m.

Rumours of the briefings filtered out on Monday. Blue Circle's shares, which fell out of the FTSE 100 in September, went into a spin: the stock yesterday closed down 10p at 271p, following a 10.5p slide on Monday.

Industry experts said the company was paying the price of increasing its exposure to the crisis-ridden Asian economies. They said that although the turmoil in the Far East had helped Blue Circle buy at bargain prices, some of the companies bought were in dire financial condition. Heavy debt burdens have been compounded by a slump in demand for cement and heavy building materials as Asian economies slowed. At the interim stage, Blue Circle's profits in Malaysia and Singapore more than halved as cement sales slowed sharply.

Analysts predict that the downturn will deepen in the second half, with the fall in demand for cement set to widen from 26 per cent in the second half to around 35 per cent.

Asia's contribution to group finances plummeted in the first half and now accounts for just over 5 per cent of Blue Circle's pounds 1bn-plus interim turnover and 4 per cent of its pounds 142m operating profit. In 1997, the region contributed more than 8 per cent of turnover and 10 per cent of operating profit.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk