Johnstone acquisition hits Ennstone profits

Redundancy costs and a fall in activity in the English aggregates market have hit profits of aggregate manufacturer Ennstone for the year ended 31 December 2004. Profit before tax was £1.1m compared to £5.6m in 2003.

The firm incurred costs of £3.972m in closing Saxon Specialist Vehicles and the Glass Reinforced pipe business. It acquired these businesses as part of the acquisition of the Johnstone Group. The purchase of the aggregates group enabled Ennstone to increase turnover by 27% to £111.5m.

Ennstone said that the volumes in the English aggregates business were affected by low levels of activity, particularly in the West Midlands, due to a lack of major contracts and the continuing presence of recycled material. The firm said that although there was a marginal increase in volumes, the competitive market resulted in price erosion and lower margins.

The firm said that the integration of Johnson quarries would increase its output of specialist aggregates. It said that development of new ready mixed and concrete plants and asphalt plants would underpin aggregate volumes.

Chairman Vaughan McLeod said: “This was a year of significant development for the group. The acquisition of Johnston is a major step towards building a fully integrated Midlands operation. Excellent progress has also been made in Scotland and the US.

McLeod said that the board would continue to expand the group by acquisition and organic growth. It also said it would also aim to target operational efficiencies to be the lowest cost producer in its markets.

Sales at lunchtime were down 0.35p at 45.150p.