Price war fears knock Blue Circle shares

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The Independent Online
INVESTORS disappointed by first-half figures from Blue Circle Industries, Britain's biggest cement producer, lopped 14p off the share price to 300p.

The fall reflected concern about the price war in the heating industry that has affected the group's Potterton Myson subsidiary. But pre- tax profits, excluding previously announced exceptional costs of pounds 40.3m for the sale of its New World offshoot, rose from pounds 60.5m to pounds 88.1m. Within those numbers, operating profits from British heating showed a 24 per cent fall to pounds 9.2m. Despite that, analysts slightly upgraded full- year forecasts to about pounds 230m.

Keith Orrell-Jones, managing director of Blue Circle, said: 'A number of businesses are underperforming and this is of concern to us. However, this should not detract from the fact that we are making real progress. Over the last 18 months we have had three consecutive six- month periods of growth.

'We are now satisfied we have fully delivered on promises made when we restructured the UK cement businesses.'

Volume sales at 11 cement sites in Britain rose 11 per cent to 3.27 million tons, and average selling prices were slightly higher. Operating profits soared from pounds 12.1m to pounds 28.2m.

Operations in the US were affected by the severe winter, but profits still rose from pounds 6.6m to pounds 11m and Mr Orrell- Jones said: 'Volume sales in our markets rose 8 per cent, against 11 per cent nationally, and price increases were applied in April and August.'

Earnings per share increased from 5p to 7.5p.

However, the company is sticking to its promise to rebuild dividend cover by pegging the interim payout at 3.75p.