View from City Road: Tarmac chief needs to prove himself
Wednesday 28 April 1993
But it is easy to seduce the City with tough talk about strengthening and tightening controls - particularly if accompanied by swingeing write-downs to make the rehabilitation that much smoother. The hard part is in making sure investors' expectations are not disappointed.
So far, he has earned the benefit of the doubt. His strategy of focusing on three core areas - contracting, quarry products and housing - looks right considering its leadership and reputation in these businesses. While the long-delayed sale of Econowaste is testing the City's faith in his pounds 300m disposal programme, he is clearly aware that his target of 33 per cent gearing by the year-end will be impossible without them.
That gearing target also explains his decision to rein back the housing division, which is expected to sell up to 1,300 fewer houses in 1993 despite the best first quarter since 1989. More than pounds 140m capital was cut from the business last year, and a further pounds 60m is expected this.
If expectations of recovery prove justified, Tarmac should manage to achieve about pounds 50m pre-tax profit this year - more than double the pre-exceptional result in 1992 - and perhaps pounds 100m next. That puts it on a multiple of almost 17 times earnings for 1994 and the dividend - if it is held at 5.5p - will still be uncovered. Shareholders prefer to focus on the pounds 200m which may be possible by 1996 and are reluctant to sell. Buyers should wait for more evidence that Mr Simms can live up to his promise.
- 1 Avengers: Age of Ultron: Nearly 700 German cinemas refuse to show movie
- 2 Donald Trump decides that Baltimore riots are Barack Obama's fault
- 3 X Factor in crisis as numbers of people auditioning plummets
- 4 General Election 2015: Stephen Hawking says he will vote Labour
- 5 Baltimore riots: Furious mother marches her son home live on TV
Bali Nine executions live: Indonesian firing squad shoots dead eight drug offenders despite outcry around world, but a ninth is spared
Keith Harris dead: Orville the Duck ventriloquist dies aged 67 following battle with cancer
The four utterly contradictory polls that tell the story of this election and why it is pointless trying to predict the outcome
Donald Trump decides that Baltimore riots are Barack Obama's fault
General Election 2015: Prospect of Labour-SNP coalition makes one in four voters less likely to support Ed Miliband, says survey
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Aaron and Melissa Klein: Oregon anti-gay bakers ordered to pay $135,000 after refusing to make cake for same-sex wedding
EU exit would hit UK economy much harder than neighbouring countries, study finds
Andrew Lloyd Webber: Phantom of the Opera writer mocked after issuing a warning about Ed Miliband and Nicola Sturgeon
General election 2015: Labour will toughen hate crimes legislation surrounding Islamophobia
iJobs Money & Business
£30000 - £38000 per annum: Recruitment Genius: They are a financial services c...
£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...
£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...
£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...