Buoyant construction market boosts pre-tax profits 47% to £4.7m

A BUOYANT construction market boosted Readymix's pre-tax profits last year by 47 per cent to £4.7 million. All its operations contributed to the good results.

Adverse weather conditions had some negative impact in the early months, but there was a good surge forward in the remainder of 1995. Cement based products performed best. However, the bitumen base road materials were not as buoyant.

There was some evidence of a slackening demand for centre city apartments in the last quarter of the year, Mr John McNerney, managing director, said. However, overall there was no apparent slackening in demand for housing.

The buoyant economy led to increased levels of activity in the commercial sector. This included major re developments in urban areas. Readymix also found that there was reasonable levels of activity in industrial estates and one off industrial developments.

Spending on construction in the agricultural sector was described as satisfactory. However, the group complained that overcapacity in many rural areas led to a continuation of price cutting and, as a result, margins were hit. Some of these operations are now showing inadequate returns.

Readymix, in common with other construction materials companies, said the level of expenditure on roads was unsatisfactory. Group sales grew by 14.6 per cent from £35.8 million to £41.0 million. Margins improved from 8.9p per cent to 11.5 per cent. This is attributed to a mixture of higher volumes and "modest" price increases. Volume increases were evenly spread in most products, and areas, of operations, excluding blacktop products. Prices "were more patchy", Readymix said.

Earnings per share improved from 7.02p to 10.38p. A final dividend of 2.5p net per share has been declared, making a total of 3.7p, representing a 12.5 per cent increase on the previous year.

Despite a high level of capital expenditure, it has strengthened its financial position. It has no borrowings and net cash stood at £5 million at the end of 1995.

Commenting on this year, Mr McNerney said that January and February, Mr McNerney said, have been "very busy months". Further growth is anticipated for the remainder of the year, he added, but it may not be as strong as in 1995.