Under- the- weather RMC sounds alarm

AGGREGATES giant RMC remained grimly philosophical today after warning that dismal weather in Germany, political uncertainty in Israel and stuttering demand in Britain would leave it substantially short of last year's profits.

Chief executive Peter Young said the company, whose shares touched a five-year low in October, was now unlikely to report more than GBP 265 million in the financial year to 31 December 1998.

That compares with last year's figure of GBP 308 million and City expectations of about GBP 292 million. The shares crashed 7% to 709p. HSBC trimmed its full-year forecast from GBP 287 million to GBP 257 million and AMB Amro cut its figure from GBP 290 million to GBP 265 million. Young said the problems were caused mainly by poor winter weather in eastern Germany during the fourth quarter, where construction work was held up by rain in November and snow in early December. The company has spent GBP 10 million closing 41 ready-mixed concrete factories in Germany and cutting 500 jobs, bringing the total over the last three years to 1600. A further 230 staff will be made redundant this year. There have been about 260 redundancies in Britain. Young said of the eastern German problems: "The east is only a quarter of our German business, and the old west is much bigger and more important to us. People worry about Germany and we're bumping along at the bottom of the cycle but it will have its day again "If you want to be in Europe, you have to be in Germany. I don't think the cycle has much further to go and when it does pick up we will be in a strong position." Young said RMC would be better placed in the spring to say whether this year's trading would pick up. The company hopes to gain from a strong euro, which it also hopes will help encourage economic growth across continental Europe. "Around 50% of our business will now be measured in euros. If the euro does strengthen, then that will help us but what really matters is what happens to the economies of those who have joined," he said. The tough Emu convergence criteria had held back government spending on construction projects, he said, and hopefully more money would now be available for this. In Israel, political turbulence held back trading despite continued signs of "strong pent-up growth". The group's US operations showed further strong growth, with volumes rising steadily across the product range. Exceptional charges totalling GBP 15 million will be added to this year's numbers while a further GBP 5 million charge will be made for translating overseas profits.

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