RMC swept higher by lure of east
Thursday 13 April 1995
But it takes more than a favourable climate for building and construction to explain the near 33 per cent outperformance of the shares against the sector in the past year. Despite a 22p fall to £10.24 yesterday, they remain near their all-time high.
RMC's profits have stood up well during the recession and yesterday's results bear witness to RMC's continuing qualities. Pre-tax profits up 59 per cent to £283m were struck on turnover that advanced just short of 19 per cent to £4.16bn in the 12 months to December.
As RMC is a large player, the effect of the industry's recovery from its trough in 1993 was always going to be substantial. In the UK, profits more than doubled to £71.6m. Margins benefited from a virtuous circle of price increases of between 6 and 7 per cent across the range of products, allied with much higher volumes. In concrete and sand and gravel, these were typically 10 to 11 per cent higher.
But Germany remains the powerhouse of the group and where the most promise lies. The company will have invested around £500m over a period of five years when the giant Rudersdorf cement works near Berlin comes fully on stream later this year.
One of the largest operations in Europe, it will put the company in prime position to cash in on the boom in construction in eastern Germany that has followed the collapse of the Berlin Wall.
Last year, a capacity-constrained RMC raised cement volumes by nearly a fifth in eastern Germany, where demand rose a quarter. That helped drive German profits ahead by £27.1m to £173m. The new plant will not necessarily solve the capacity problem this year, according to RMC's chairman, Jim Owen. Volumes are expected to increase around 10 per cent against a 15 per cent rise in the market, while prices continue to suffer from cheap dumping from Poland.
That is likely to make growth less spectacular in 1995. The company is also cautious about the home market. It is early days to see if recently posted price rises of up to 7 per cent will stick and the gloomier housing market is likely to restrain volume growth in the UK market this year.
With David Mathers of James Capel forecasting profits of £338m for 1995, the shares stand on a prospective multiple of around 12.5. That looks high enough for now, but the shares should be held for the good long-term growth prospects in Germany.
- 1 Al Pacino on suffering from depression: 'It can last and it's terrifying'
- 2 Half of young women unable to ‘locate vagina’ and 65% find it difficult to say the word
- 3 Saudis risk new Muslim division with proposal to move Mohamed’s tomb
- 4 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
- 5 Mexican woman becomes world’s 'oldest person' at 127
Perez Hilton apologises for Jennifer Lawrence naked photo leak
Victoria Justice on naked photo leak: 'Let me nip this in the bud right now'
Jennifer Lawrence 'nude photo hacker' claims there are hundreds more celebrity images to be published
Saudis risk new Muslim division with proposal to move Mohamed’s tomb
Ariana Grande nude photos leak: 'These are completely fake' say singer's representatives
Rotherham child sex abuse scandal: Labour Home Office to be probed over what Tony Blair's government knew - and when
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Ashya King: Parents of five-year-old boy refused permission to visit him in hospital and denied bail at Spanish court
With Douglas Carswell joining Ukip, my party has taken another giant step forward
When elitism grips the top of British society to this extent, there is only one answer: abolish private schools
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
iJobs Money & Business
£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...
£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...
£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...
£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...