RMC eyes US and Europe for growth

RMC, the building materials group, yesterday said it could spend up to pounds 1.2bn to buy businesses in the fast-growing US and European markets.

The world's largest producer of ready-mixed concrete said it would add to last year's pounds 256m acquisition spending in an bid to reduce its dependence on Germany, where demand and prices have slumped, and the UK, where volumes are unlikely to grow.

Peter Young, chief executive, said RMC would strive to exploit the boom in the US market, where a $200bn (pounds 127bn) infrastructure programme will boost demand for the next five years. The US now accounts for about 18 per cent of group profits, compared with more than half from the UK and Germany. Mr Young said he wanted the US contribution to reach 20 per cent for the next two or three years.

RMC's US ambitions pleased the market and triggered an 11 per cent rise in the shares to 838.5p. The group underlined its commitment to the US yesterday with the purchase of two ready-mixed concrete companies with operations in Texas, Nevada and New Mexico for a total pounds 72.1m. The acquisitions raise RMC's US coverage from nine to 12 states.

RMC could significantly boost its American presence if it succeeds in buying Scancem, the Scandinavian building materials group that owns several US assets. RMC yesterday received unexpected help in the race for Scancem; Lennart Johansson, a Scancem board member, said RMC was "willing to buy whole or part" of the group, which owns Castle Cement, Britain's second- largest cement maker.

RMC is understood not to have reached a decision yet on whether to bid for Scancem, but Mr Young said the company was looking at a range of acquisition opportunities. These included expanding in Eastern Europe and in Western European countries apart from Germany.

The poor performance of the German operations was chiefly responsible for a 14 per cent fall in 1998 pre-tax profits to pounds 264.5m on sales up by 1.8 per cent to pounds 4.4bn. The results, flagged in a warning in January, suffered from a collapse in the east German market where volumes for RMC products fell 24 per cent, hit by overcapacity in the building industry. The slump is expected to continue into 1999, with volumes set to fall by a further 6 to 7 per cent, the company said.

Germany is set to weigh heavily on RMC's future prospects, despite the shrinking size of its profit contribution, and the shares are no more than a hold at present. As one analyst said, the shares, on around 12 times a 1999 profit forecast of pounds 290m, "look quite cheap, but there is still this problem in Germany."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border