RMC boss makes aggregates pledge

There will be little further rationalisation of the UK aggregates industry, RMC chief executive Stuart Walker claimed this week. "Consolidation can't go a lot further," he said.

RMC now holds strong positions in four sectors of the UK aggregates market as the number one in ready-mixed concrete and the number three in cement, aggregates and roof tiling (following the acquisition of Russell).

RMC bought Russell because it had a weakness in the aggregates market in Scotland. The acquisition gives it a number two position in Scotland, with Russell's roof tiling business coming as a bonus.

The major changes in the past three years have led to a total reshaping of the UK cement industry, with Heidelburger snapping up Castle Cement in 1999 for £1.5bn, RMC's £900m acquisition of Rugby Cement at the same time and Lafarge's more recent successful takeover of Blue Circle at a cost of £3.1bn.

"We anticipated these developments and didn't want to miss out," said Walker. "It was important that RMC bought Rugby before Blue Circle [the remaining independent] was snapped up, otherwise the selling price for Rugby could have been higher."

Vertical integration has had little effect on prices as market shares remain entrenched as the three new cement manufacturers put profitability ahead of volumes.

"Shaking up the market won't do much for anyone's profits," said Walker. "Lafarge and Heidelburger are both responsible players. There was the smooth transition that could have been expected."RMC's year-on-year UK price increases are 3-4% in ready-mixed concrete, 5-6% in aggregates; and 3-4% in cement. Walker said: "Volumes have been disappointing this year. Concrete demand is weak, up 2%, and aggregates are little better, with volumes up 4%. The south is proving better than the north."