RMC blames early onset of foul weather for profits warning

RMC, the world's largest ready-mix concrete manufacturer, yesterday warned its 2002 profits will be lower than forecast because the early onset of cold and rainy weather across Europe has stalled building and construction work.

Sir John Parker, the chairman of the group, said the trading outlook for its major markets in 2003 was both "uncertain and fragile". Profit before tax and exceptional items for the year is expected to fall about 15 per cent and is unlikely to exceed £145m, due to a major decline in business in November. Analysts had expected profits to be in the region of £170m and are now anticipating a dividend cut from the group. The news sent shares down 7.9 per cent to a new all-time low of 354p.

Stuart Walker, the chief executive of the company, said: "The weather has been very poor and there have been cold conditions across continental Europe. We had made good progress in October, but November and December have been very difficult indeed."

He said business in France, Ireland and Germany was roughly 20 per cent down in November. "When the weather gets bad in Germany, workers are laid off and are funded by the state. Most of Germany has closed down," Mr Walker said.

Analysts believe that last year's dividend of 31.2p is now under serious pressure, given the spiralling profits of the company. Dresdner Kleinwort Wasserstein is revising its earnings per share forecast to 25p. "Clearly weather has been a factor, but once again RMC's profits warning is materially greater than its peers. We attribute this to RMC's stronger presence in both ready-mix globally and Germany," Darren Shaw, at DKW, said.

The group is proceeding with plans to reduce debts through disposals and cash generation. It has committed to repay borrowings so that it has less than £1bn of debts by 2003 and yesterday announced it had secured a £900m five-year bank loan.