Rough road ahead for UK arm, RMC warns

Rough road ahead for UK arm, RMC warns
Published: 29 June 2004

RMC has warned that reduced spending on roads in Britain coupled with problems at one of its cement plants would slash first-half profits in its UK business by almost half. However, the group, which is the world’s biggest maker of ready mixed concrete, said it was still on track to meet full-year earnings forecasts. Better-than-expected results in the US and France would offset the disappointing performance in the UK, caused partly by problems at the Rugby cement works. David Munro, group chief executive, said lower spending by the UK highways agency had also hit sales. The company said profitability in the UK for the first half "is expected to be only slightly more than half of the pounds 41m reported in the corresponding period last year", despite the continued cost reduction programme. Mr Munro said total first-half profits would be "significantly ahead of last year despite the fact that we’re missing the profit from two quite major businesses we sold last year".

Business in Germany is recovering and volumes have increased strongly in France and Poland, he added. Mr Munro, who took over the role in January, is conducting a strategic review of the business and revealed a series of management changes yesterday. Mike Foster and Graham Clark, both executive directors, will step down from the board but will work as advisers to the company until the end of the year. Jim Brooks, a member of the group’s executive committee, will head a new division bringing together all the group’s cement operations. Mr Munro said: "Until now it has been managed very much on a country by country basis but cement is really an international business and this will help us take better decisions in the business." Meanwhile, the materials business will be divided into four operations: UK and Ireland, the Americas, Southern Europe and Central Europe.