Operating performance

The year was marked by a range of initiatives to drive and unlock further shareholder value from the current portfolio of businesses.

Overall, within the UK market, volumes in aggregates and concrete products were in line with growth in the construction markets, with lower demand in housing and roads being offset by improved demand in the commercial and infrastructure sectors.

In the UK Aggregate Products business, operating profits increased by 21% compared with the 2006 figure, mainly as a consequence of the business being well placed to capitalise on benign markets as well as successful cost savings initiatives aimed at ensuring that aggregates and asphalt deliveries come from the lowest cost source available.

In the UK Building Products business, operating profits increased by 27% compared with 2006. Its commercial strategy was focused around offering customers comprehensive building solutions. Cement achieved record turnover in 2007, driven by increased output in a favourable market environment. A thorough review of the operational and commercial structure of Buxton Lime and Cement has been undertaken, a process that is now largely complete, with the consequent improvements expected to contribute $10 million of additional cost savings during the period 2008 to 2010.

Tarmac International’s higher operating profits were partially offset by market weaknesses and high cost pressures in Spain and Romania. The year witnessed a rebalancing of the company’s international activities, with a $20 million expansion programme in growth areas such as Dubai and the benefits coming through in 2007 from the disposal of non-core or underperforming businesses in 2006.