The Investment Column: Rocky times at Redland
Friday 26 September 1997
In five years at the head of the once-great aggregates and roof tiles, he has had to face a barrage of negative sentiment.
Yesterday, however, looked like being the coup de grace.
It was not that the City had not been braced for bad news.
RMC has been warning about a downturn there for some time, reiterating its view last week. But Redland's 13 per cent decline in underlying profits before exceptionals to pounds 71m for the half year to June was much lower than the lowest forecasts.
Even worse was the news that the slowing roofing market in Germany, which Redland dominates with a 40 per cent share, is going to fall further next year and the group may have to trim prices to maintain its position, sparking fears of a price war.
The problem for Redland is the feeling that management has done too little, too late to turn the group around in the wake of the disastrous pounds 1bn deal to buy Steetley in 1992. The group was dragged kicking and screaming into cutting its dividend by a third in March 1995.
With no rise in the payment since, and cover looking thin, that now looks to have been too timid and the company was having to deny wild rumours yesterday that another cut was in the air. But it is at Germany that most of the analysts' ire was being directed yesterday.
It has been clear for some time that the building boom from German reunification would eventually turn to bust.
Yet it has only been in the past year that Redland has really moved to get to grips with Braas, the majority-owned German roof tiles which has been the backbone of the group over nearly 10 years.
Even though the latest cost saving moves announced yesterday are expected to bring the total to be realised by 1999 close to pounds 60m, Redland is not in full command of its destiny, given that the new Redland Braas Building remains only 57 per cent-owned.
The only thing likely to save Mr Napier now is the absence of any credible replacements willing to put their head in Redland's noose.
If profits make pounds 200m this year, the shares, down 61.5p at 220p, stand on a forward price/earnings ratio of 11. With the dividend again in doubt, the only hope for holders is a bid. Otherwise avoid.
- 1 JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
- 2 The West has it totally wrong on Lee Kuan Yew
- 3 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 4 Video shows what happens when lava is poured onto ice
- 5 Cate Blanchett loses temper during interview: 'That's your f**king question?'
Andreas Lubitz: Who is Germanwings co-pilot who 'locked out captain and crashed flight 9525'?
Germanwings crash: The poignant final photograph taken by Iranian journalist on doomed flight after watching Barcelona play Real Madrid
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Cate Blanchett loses temper during interview: 'That's your f**king question?'
Jeremy Clarkson calls on trolls to leave producer Oisin Tymon alone: 'None of this is his fault'
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Vote Ukip, says far-right group Britain First
iJobs Money & Business
£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...
£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...
£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...
£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...