City File: Contract woes

THE market seemed to be shocked by the miserable results from Alfred McAlpine and marked the shares down by 20p to a mere 104p. But, as Howard Proctor of Panmure Gordon points out, the results coming through in the construction sector as a whole reflect contracts secured in the relatively good times a couple of years ago, and the contractors have gained from falling prices of raw materials.

'All the contractors are now taking on contracts at a loss, based on the assumption that input prices will continue to fall. But the building material suppliers are going to reduce capacity and then they'll be able to hold prices,' - a state of affairs guaranteed to prolong the misery for the contractors well into the mid-1990s.