RMC warns on trading as profits drop 15%

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The Independent Online

RMC, the ready-mixed concrete group, warned yesterday that it expected trading to remain tough for another six months at least after reporting a 15 per cent fall in profits for last year.

RMC, the ready-mixed concrete group, warned yesterday that it expected trading to remain tough for another six months at least after reporting a 15 per cent fall in profits for last year.

"Trading in 2002 was weaker in the second half than in the first and we expect broadly similar conditions in the first half of 2003 as in the second half of 2002," RMC said. Those tough conditions could be compounded by events in Iraq, it warned, either by the impact of higher oil prices or by weaker consumer confidence.

The cautious tone came as RMC reported pre-tax profits, before exceptionals, of £144.3m for 2002, down from £170.7m a year before. Turnover fell to £4.9bn from £5.2bn. The results were, however, in line with forecasts. "After a number of profit warnings last year, the group met reduced expectations," analysts at Schroder Salomon Smith Barney said.

RMC, which issued its last profits warning in December, said any improvement in trading conditions was likely to come in the second half of the year. Less debt, lower interest rates as well as a raft of measures put in place to improve its performance would help it weather the storms in the meantime, it said.

RMC's debt fell to £1.2bn from £1.5bn thanks to cash from sales of non-core assets. The company said yesterday debt was on track to fall to less than £1bn by the end of the year.

The company also said yesterday it had made a provision of £16m to cover legal fees and any potential fines as a result of an investigation into alleged anti-competitive practices in the German cement industry. RMC has been under particular pressure in Germany thanks to the tough economic conditions there, bad weather in the autumn and pricing pressure.

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