KVaeRNER IS to sell off its structural steel business, Cleveland Bridge, as part of a huge restructuring exercise geared to putting the group into profit.
Kvaerner Construction chief executive Keith Clarke said Cleveland Bridge, despite improving performance in the last two years, 'still doesn't show adequate returns on shareholder assets'. He added: 'We have a clear view: if we can't get return for risk and there appears to be over capacity, we will axe it.'
Kvaerner Engineering & Contracting chief John Fletcher, in charge of the sell-off, added that Cleveland Bridge's heavy fabrication bias was at odds with Kvaerner's move away from manufacturing. It also duplicated competencies found elsewhere within the Construction division.
Though Cleveland Bridge's Dubai office is strong, its Malaysian and UK arms have been dogged by depressed international markets, stiff competition from other steel fabrication firms and the strong pound, Fletcher stated.
Cleveland Bridge shed nearly 200 staff between December and January in a bid to cut costs. Further losses could not be ruled out before the sell-off is complete.
Kvaerner's re-organisation will also free it from its loss-making ship building and pulp & paper interests, leaving the parent company three core businesses - Construction, Engineering & Contracting and Oil & Gas.
The move is part of an attempt to wipe out Kvaerner's £1bn of debt - a process begun by president and CEO Kjell Almskog when he joined the firm last year (NCE 5 November 1998). Construction has been Kvaerner's best performing division in recent years, returning an operating profit of £7.6M last year.
To aid growth the group will be investing in its specialist sub-groups: foundation and ground engineering business Cementation, M&E firm Rashleigh Weatherfoil and Mining. And though it closed three offices earlier this year in south east Asia, Construction is aiming to grow in Hong Kong, Singapore and mainland China.