BPB says board price war is over

JOHN MAXWELL, chief executive of BPB, Europe's biggest plasterboard manufacturer, said yesterday the ruinous price war that had cost the industry hundreds of millions of pounds in lost profits was over.

However, the company warned that as recession started to hit European construction companies demand for the company's products was falling on the Continent.

'The price war has done neither us nor our customers any favours. It is important that prices return to levels that give us a reasonable return,' he said.

Increases of 29 per cent since prices bottomed out in February 1992 had helped profits to rise 52 per cent to pounds 57.5m, but Mr Maxwell could not say whether further price rises would be possible this year.

The industry has been plagued by plunging prices as the three largest European players, BPB, Lafarge of France and Germany's Knauf, have scrambled for market share. Despite recent rises, prices are still below those achieved four years ago.

As a result of the market share battle, BPB, which used to enjoy more than 90 per cent of the UK market, now controls about 60 per cent of the home industry.

As forecast in February when the company raised pounds 64m through a convertible bond issue, the final dividend was cut from 7.25p to 4.8p, making a total for the year of 7.5p, a 33 per cent decline. The cut meant that the payout was just covered by earnings per share, which rose a third to 8.1p.

Despite lower sales in the UK, operating profits rose as a result of cost- cutting, which has halved the workforce in three years.

Profits from plasterboard and plaster rose 72 per cent to pounds 72m on an 11 per cent increase in sales to pounds 960m. That improvement more than made up for a decline in the contribution from paper and packaging from pounds 13m to pounds 8.2m.

BPB's shares, which have risen from a low of 123p last September, ended yesterday 1p down at 223p.

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