Strength of sterling slices pounds 32m off RMC profits

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The Independent Online
RMC, one of the largest building materials group's in the world, has become the latest in a growing list of companies to suffer from the strong pound. It warned yesterday that a sharp rise in sterling, which appreciated by one-fifth last year against currencies such as the German mark, had knocked pounds 32.7m off its pre-tax profits.

RMC's profits rose 4 per cent to pounds 308m, although earnings would have risen 15 per cent if the sterling had remained constant. RMC warned exchange rates would also take a heavy toll on current-year profits. The pound has risen by around another 9 per cent against a basket of currencies since the start of the year, which means it could wipe more than pounds 15m off RMC's earnings in 1998.

However, RMC said the rise would not prevent it from looking at more overseas acquisitions. Peter Young, chief executive, said RMC could comfortably afford to spend pounds 700m this year on purchases and the problems in the Far East could provide acquisition opportunities. RMC is also eyeing up targets in the US. RMC is considering selling Hall & Co, its troubled builders merchant.Mr Young said he was reviewing the future of the division after restructuring the operation.

RMC shrugged off a poor German construction market by producing a 5.7 per cent rise in domestic trading profits and said that the building industry over there was finally showing signs of a recovery.

Investment column, page 26