22 Feb 2006
TARMAC SETS SIGHTS ON LONG-TERM PROFITABILITY
Tarmac announces that its operating profits for 2005 were $340m in line with the previous year. Commenting on the results, Chief Executive Robbie Robertson said: "With the exception of asphalt, the UK market has been in decline, with housing demand for blocks particularly weak. Energy costs have put pressure on margins, and it has been a very competitive market.
"In 2005 we streamlined and strengthened our structure and management team. The new organisation is focused on standardising support processes and reducing costs as well as improving services for its customers. The focus puts under performing assets, or those that Tarmac cannot see developing scale, under increased scrutiny."
As a result, Tarmac has sold its concrete business in India and plans to sell its Hong Kong business, some non-core assets in Germany, and its UK paving and Minerals and Materials businesses.
Tarmac is also announcing acquisitions of the order of $70 million. Tarmac acquired National Road Planing Ltd, a Lincolnshire-based road planing business, to build a leading position as a provider of start to finish road recycling services in the UK and further investments are planned in this area. Tarmac is also investing in its UK-based concrete blocks business - Topblock - to strengthen its position as a market-leading supplier of quality concrete construction products.
In Eastern Europe, Tarmac's recent investments include a majority stake in CMG srl, a leading Romanian producer of aggregates and ready mixed concrete and the acquisition of Sylex Sp.zo.o, a successful sand and gravel operation in Poland. The latter investment positions Tarmac as the leading aggregates supplier in the Lodz region of central Poland. The investment in CMG is tarmac's first venture into Romania, which like Poland and the Czech Republic, has been identified by Tarmac as having exciting growth potential.
Robbie Robertson concludes:
"Tarmac is a market leader in the UK and is committed to replicating its successes internationally in selected businesses and territories whilst also driving further performance improvements elsewhere.
"Already a strong performer, reporting healthy returns in testing market and economic conditions, we will continue to invest in areas of opportunity as they arise, while developing our products and services to meet the needs of the market now and in the future."
