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Tarmac cuts civils costs and jobs

TARMAC IS merging its civil engineering and international divisions in an attempt to cut costs by between pounds3M and pounds5M a year, chief executive Sir Neville Simms said this week.

Tarmac's offices in Brentford, west London, will shut and the newly formed contracting business will operate from group headquarters in Wolverhampton.

Simms said the move was in response to continued falls in civil engineering workload. Plans to rationalise the civils contracting division had been developed over the past two years, but Tarmac had waited for the outcome of the Government's roads and comprehensive spending reviews this summer before making a firm decision.

Results for the half year to 30 June showed that Construction Services turnover increased to pounds875.3M from pounds829M in the same period of 1997.

Construction operating profits increased from pounds7.8M to pounds12M. Tarmac Group pre-tax profit was pounds49.7M, up from pounds38.6M, while turnover increased to pounds1.5bn from pounds1.4bn.

'There is going to be no great boom moving forwards - civil engineering is still bumping along the bottom,' said Simms.

He said the company plans 'to reposition a large part of Construction Services towards the rapidly growing services sector - especially operating and maintenance.'

'It is now clear that these activities have long term margins averaging over 5% and greater certainty of work flow than traditional contracting,' he said.

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