BM still suffering from buying spree

HALF-YEAR results published yesterday by the engineer BM Group were once again scarred by fallout from the company's aggressive acquisition-led growth strategy in the late 1980s and early 1990s, writes Robert Cole.

Taxable losses for the six months to 31 December were pounds 14.1m. Included in the loss was a pounds 6m charge to reorganise Canadian businesses ready for sale and a pounds 13m write-off of goodwill relating to companies BM has already sold.

A clear picture began to emerge yesterday of why the former stock market star fell from grace two years ago. The distribution business of Blackwood Hodge, acquired by BM in 1990, was heavily influenced by the manufacturers whose products it supplied. Profit margins seem to have been squeezed by manufacturers eager to make sales.

The direct cause of BM's decline was debt. Borrowings climbed to pounds 150m, equivalent to nearly 200 per cent gearing, at one stage. Yesterday it said debts were reduced from pounds 124m to pounds 98m. More asset sales are expected to bring them below pounds 50m in 1994.

Sandy Morris, an analyst with securities house NatWest Markets, said: 'You have to give credit to this management team. In the year to June 1995 we might even see a modestly profitable concern.'