Bicc Shares Fall On 0m Loss
Shares in BICC dropped 5.5 per cent yesterday as the cables and construction group cut its dividend by more than a third after announcing a plunge into the red.
BICC warned that trading in its European cable operations would remain difficult until the second half of the year, prompting analysts to reduce profit forecasts by about one-tenth. Some analysts had expected the 12.4p to 8p dividend cut, but the shares, which were the worst performers in the electronic equipment sector last year, fell by 8p to 146 1 /2p, 200p below their 1996 peak.
BICC disclosed it had made losses in 1997, after making £140m of provisions for rationalising its European energy cables business. The provisions, announced last month, reduced a £64m pre-tax profit for BICC to a £30m loss. Even before exceptional items, profits were 15 per cent lower at £110m. Alan Jones, chief executive, announced a sweeping restructuring of its European energy cables business last month, involving 2,000 job cuts and staff transfers.
That market offered little possibility of acceptable profits or growth, because of over-supply and price wars, he said. The group has cut £45m from its energy cables costs through merging its German activities with NKF, the Dutch cable group, and halving the pairs combined capacity. It also disposed of its construction cables business and built up the utility cables division through agreements with Delta last month. Jones said yesterday the benefits would not show until later this year.
We expect the first half of the year will continue to be challenging for our cable operations but in the latter part of the year we anticipate seeing evidence of the results of the action we have taken, he said. Turmoil in Asian markets would delay BICCs investment plans in the region by nine months, he said, but investment in new technology elsewhere would continue. The group reported better results at Balfour Beatty, the construction division, which accounts for half of group sales. Profits rose from £10m to £42m as margins improved in the recovering UK building maret.