In common with many aggregate and cement businesses, Blue Circle has been snapping up Asian assets at knock-down prices because of the economic crisis. It now has almost 50 per cent of the Malaysian cement market and 20 per cent of the Philippine market following pounds 700m of Asian investment.
The company has never promised rapid returns from this. It says the chance to buy production at less than half the usual price per ton is too good to miss. But the benefits now seem even further away.
Overall volumes in Asia are well down on last year, led by a 34 per cent fall in Malaysian demand. Sales elsewhere in the region are down over 10 per cent. The story is the same in South America, where sales are expected to fall 15 per cent this year against a forecast 6 per cent. Although the company says there are tentative signs of recovery, this is worse than expected. The Asia crisis has clearly not bottomed out yet.
Blue Circle has limited the damage by putting its heating business up for sale. Whether it can secure a good price quickly is dubious. The shares were also supported by double-digit US sales growth. But the company says this will not be sustained. Credit Lyonnais expects pretax profits of pounds 321m and earnings of 28p this year. At 454.75p, down only 6.25p yesterday, the shares are fully valued and investors should consider taking profits.