Restructured BTR toasts new era

Ian Strachan, the former RTZ executive brought in to revitalise BTR, stamped his mark on the sprawling conglomerate yesterday with a radical restructuring of the underperforming group and a 35 per cent cut in the dividend. The well-flagged moves were broadly welcomed by the City which marked the shares 7.5p higher to 273.5p.

That helped to reverse a dramatic underperformance in the shares, which have fallen by a third since peaking at 407p in August 1993. During that period they have underperformed the rest of the market by almost a half.

Mr Strachan, who took over as chief executive in April last year, said: "The major reshaping of BTR marks the start of a new era. We are focusing on the profitable growth of our core engineering and manufacturing businesses by building up those which have the best global leadership potential."

BTR's new focus sees 32 formerly autonomous businesses being grouped together in four new "global groups" - automotive systems, power drives, process controls and packaging and materials - and three smaller "global and regional groups" - specialist engineering, building products and polymeric products.

The restructuring, against which BTR has taken a provision of pounds 349m, is to be accompanied by a large disposal programme which will see businesses accounting for 25 per cent of last year's group sales disposed of by the end of next year.

Mr Strachan said the disposals were well under way. Including the sale, announced yesterday, of BTR's electric power group to FKI, disposals of businesses with sales of pounds 1.5bn have been made, leaving operations with turnover of about pounds 800m still on the block.

After months of speculation, and despite a rise in the payout six months ago, BTR also bit the bullet and cut its interim dividend from 5.54p to 4.0p. It also promised a reduction in the final payout from 9.15p to 5.6p.

Mr Strachan said the cut in the dividend, which had accounted for about two-thirds of BTR's cash flow, would allow investment in the core businesses. He promised future growth in line with the increase in underlying earnings per share.

News of the restructuring accompanied interim profit figures showing profits before tax all but wiped out by provisions, which also included a pounds 273m hit to cover the cost of exiting discontinued businesses. Before exceptionals, profits of pounds 626m compared with pounds 729m in the first half of 1995.

Mr Strachan justified the disposal of a quarter of BTR's businesses by pointing to the low return on both sales and capital employed of the businesses to be sold. Compared to the 20 per cent operating margin of the retained businesses those being sold had returns of less than half as much.

He dismissed suggestions that BTR was following in the footsteps of Hanson, rationalising its disparate activities as a prelude to a break-up of the group into more focused businesses.

Analysts welcomed the move towards greater focus at the group and almost 24 million BTR shares changed hands yesterday, nearly three times the daily average of 8.8 million.