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Mowlem back in black after cuts

JOHN Mowlem reaped the benefit of a huge cost-cutting and redundancy programme last week when it unveiled a return to the black.

The group, which last year cut overheads by 30 million, shed around 1,000 jobs and sold its house building arm, reported a pre-tax profit of 4.8 million compared with a loss of 124.2 million in the previous year.

A turnaround at the groups contracting and scaffolding businesses which together lost 41 million in 1993 and an end to property losses were behind the bounce back.

But chief executive John Marshall said: We are not going to ease up the pressure on fixed and overhead costs. We have gone through a lot of pain to get them down.

The firm also warned that its contracting markets remained difficult and that its German operation, Bau Tec, incurred losses.

Further rationalisation may also loom at SGBs European business.

Mowlems contracting arm made a profit of 4.3 million on a turnover of 1.1 billion although this was knocked by exceptional costs of 3.5 million to cover reorganisation and redundancy costs.

But the division earned 4.5 million in net interest and Mowlem said it was a creditable performance with good results from its civils arm, its geotechnical and environmental division and Mowlem Facilities Management.

The groups order book slipped to 805 million from 835 million.

Mowlems scaffolding and access business swung back to a profit of 13.4 million from a loss of 26.4 million last time, thanks largely to a strong recovery at the hire and sale business SGB Youngman. SGB Contracting has focused on higher margin work.

The group retained net cash of 41.2 million and it has invested in new niche markets such as facilities management, where margins were 3.5-4 per cent and it has acquired the former National Coal Boards laboratories.

The group was also bidding for two more private UK prison schemes on a design/ construct/ finance basis.

London City Airport produced an operating loss of 2.9 million, compared with a loss of 4.8 million last time.

Group turnover was little changed at 1.36 billion.