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.
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
iJobs Money & Business
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £25000 per annum + OTE £35000: SThree: SThree are a global FTSE 250 b...