RMC 1H net drops 63%

RMC 1H net drops 63%
Published: 02 September 2004

RMC Group Plc said first-half profit fell 63 per cent as a decline in UK road building hurt demand.

Net income dropped to UK£21.2m (US$38m) from  UK£57.7m a year earlier. Revenue fell eight per cent to UK£2.17bn, the company said.

Chief Executive David Munro, 48, who took over in January, is reviewing RMC’s businesses as he looks for cost cuts to counter flagging sales in the U.K. The company has already eliminated 6,000 jobs or 18 per cent of its workforce.

“The disappointment has been Great Britain,’’ Munro said on a conference call with journalists. “The asphalt market is 10 per cent lower in the first half than a year ago because of lower spending by the UK Highways Agency. The outlook for the second half is more of the same.”

In Germany, where RMC has closed 20 unprofitable concrete plants in the last three quarters, business is “improving’” as cement prices pick up, said the company. Price increases will boost German earnings by EUR30m this year, the company said.

However, demand in France, Poland and Austria improved, while the US market has been boosted by an increased pace of homebuilding and a recovery of commercial construction as the economy improves.

RMC aims to cut costs further by creating a new global cement unit and grouping its aggregates, ready-mixed concrete and concrete products activities into geographic regions.