Redland gives warning after harsh winter

Click to follow
The Independent Online
Rudolph Agnew celebrated his first annual meeting as chairman of building materials group Redland with a profits warning, confirming the difficult conditions affecting the construction industry in the UK and Europe.

"This year the picture is further clouded by the appalling weather conditions during the winter throughout Europe which have depressed first-quarter results substantially," he told shareholders.

"These conditions lasted until the end of February in the UK and the end of March in continental Europe. Since then, volumes have returned to around expected levels although the underlying level is still slightly below last year in most European operating companies".

Redland's shares fell 8p to close at 398p on the news as Mr Agnew added: "The poor start to the year is expected to lead to group profits in the first half being well down on 1995 levels." He thought the second half would be broadly in line with the same period last year.

Last year, first-half profits amounted to pounds 165m; for the full year they were pounds 373m.

Mr Agnew told shareholders that he expected a recovery in the UK housing market to lead to improved volumes in the second half. German housing permits had also stabilised after falling 25 per cent over the year. Recent data suggested there had been a modest recovery in permits in the west of Germany.

The gloomy trading news from Redland followed a period of intense corporate restructuring which had seen the company sell its UK brick business to Ibstock for pounds 160m, a deal which is expected to be completed in July.

The group's roofing interests have also been reorganised with the creation of Redland Braas Building, which combines the existing businesses of Redland's German associate with its own operations in Britain, France, the Netherlands and other European countries. RBB will be the world's largest roof-tiling business with a 30 per cent market share in Europe.

Redland has come through a torrid start to the 1990s when it struggled with weak construction markets and high debts, partly incurred by overpaying for rival materials group Steetley. Shareholders ended up suffering a dividend cut in two stages, from 25p to 16.7p.

Analysts believe it is now in better shape, however, with pounds 220m in cash from the Braas restructuring and gearing of only 24 per cent putting it in a better position to concentrate on its core businesses.