RMC Group, the world's biggest producer of ready-mixed concrete, has agreed to sell its Ytong aerated concrete products business to Franz Haniel & Cie of Germany for 550m German marks (£169m) cash.
The disposal of its German-based division is part of a strategic review RMC began last year. The proceeds will be used to reduce borrowings, which the group aims to cut from £1.6bn to £1.3bn by the end of this year.
"The German market has been very weak in the first half of this year," Robert Lambourne, RMC's finance director said, adding that the sale was a "positive development".
Ytong, which operates in 15 countries, reported a trading profit of DM5.1m in 2000 after charging restructuring costs of DM32.3m. It is to be sold debt-free above the book value of about DM438m. But previously written-off goodwill amounts to DM147m and RMC declined to disclose the effects of the loss on the sale on the 2001 results.
Tobias Woerner, an analyst at Schroder Salomon Smith Barney, said the sale was largely neutral for the group, but added: "In terms of timing they should have got out earlier, which raises questions about strategic decision-taking."
The UK group saw pre-tax profits drop last year to £208.3m, excluding exceptionals, from £304.5m for 1999. Mr Lambourne said brokers' forecasts put this year's profits at £215m. The sale is subject to regulatory approval and Mr Woerner said he believed there was a 30 per cent risk it would be unsuccessful, but Mr Lambourne said he did not think there would be any problems.
RMC shares closed up 1.5p at 621p.Reuse content