Tarmac to match market with cut in housebuilding

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The Independent Online
TARMAC, Britain's biggest housebuilder, is to cut the number of houses it sells annually to 7,000 by closing four operating units and reducing sites by up to 10 per cent.

The moves are part of the restructuring being carried out by Neville Simms, who took over as chief executive last year. The aim is to cut debt and to reduce the size of the business to reflect the depressed market conditions.

Last year, Tarmac raised pounds 150m by selling businesses. That figure should be matched this year, mainly through the long-awaited sale of Econowaste, the waste disposal business, which the group said yesterday should be announced 'reasonably shortly'.

The four operating units, from a total of 20, are in Witham, Essex; Cannock, Staffordshire; Derby and Southampton and employ 273 people. It is likely that most of these jobs will eventually be lost.

Tarmac would not give details of provisions required for the restructuring. Analysts say it could have to write off up to pounds 300m. Smith New Court estimates that it will make exceptional provisions of pounds 160m, including a pounds 75m reduction in the value of its landbank, and a further pounds 150m of extraordinary write-offs to cover the cost of closing its property division. The group is expected just about to break even before the provisions.

Earlier this week, Wimpey, the second-largest housebuilder, warned of 'substantial provisions' that are expected to push it into a pounds 120m pre-tax loss for 1992.

At the peak of the market in 1988, Tarmac was selling more than 12,000 houses a year. Last year, that figure had fallen to just over 8,000. Meanwhile, the number of sites from which it operated has increased from 270 to more than 300. It aims to reduce that to below the 1988 level, mainly by building out its more expensive land.

The shares closed down 2p at 107p.