Redland's 40% rise surprises City: Improving housing market in Germany and Britain encourages building materials group

REDLAND, the building materials group, pleased the City yesterday with better-than-expected profits and encouraging news on trading in Britain and Germany.

The group made pounds 278.9m profit before tax, up from pounds 199m the previous year, on sales 17.2 per cent ahead at pounds 1.9bn. The 1992 results were, however, depressed by a pounds 22.5m loss on selling a French associate. Earnings per share were 26.1p, up from 18.6p - or 23.7p excluding the disposal loss.

Robert Napier, chief executive, said: 'In the United Kingdom, prospects do at last look more encouraging, with the housing market improving and, after a number of years of decline, prices and margins are now recovering.'

Profits in Britain dipped from pounds 24.8m to pounds 22.8m, but that was due to the sale of two businesses, acquired with the purchase of Steetley in 1992. Margins, however, remained low at 4.6 per cent.

Mr Napier said prices had been increased this year - by 5 per cent in roof tiles, 10 per cent in bricks and 5 per cent in aggregates - and he expected some of the rises to hold. He added that the improvement in the housing market meant volumes of bricks and roof tiles should rise this year.

The best performance was in Germany, where profits jumped 31 per cent to pounds 150.3m, on sales up by a fifth at pounds 625m. Mr Napier said prospects for 1994 were also good because housing permits, a leading indicator of activity, had doubled in eastern Germany and risen 22 per cent in the country as a whole.

US profits more than doubled to pounds 54.5m as the group benefited from an airport contract in Colorado and hurricanes in Florida. But the group expects to be able to hold profits at that level this year.

The group paid both last year's dividends in shares, offering a 50 per cent uplift to compensate shareholders. That saved pounds 83.5m of tax, and pounds 80.8m in cash dividend payments, helping to cut debt from pounds 661m to pounds 384m, or 23 per cent of net assets. Mr Napier said that, excluding the benefit of the enhanced scrip, free cash flow was still pounds 50m. The dividend was held at 25p and the shares rose 15p to 539p.

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