Loss-making businesses sold as steel operator focuses on core operations

STRUCTURAL steel firm Billington Holdings has sold two loss-making businesses to focus on its core steel and safety operations.

The Barnsley-based group, which supplied steel to the Royal Shakespeare Company's Stratford-upon-Avon theatre, said it has struck a deal to sell Dosco Holdings for 1.8m to German firm SMT Scharf, which supplies rail systems for the mining industry.

Dosco is comprised of two Nottinghamshire mining-related businesses. Dosco Overseas Engineering makes mining equipment and Hollybank Engineering supplies underground support arches.

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Billington said the deal is a "very positive move" as it removes the last of its non-core businesses, allowing it to concentrate on structural steel and building safety systems.

The group added it also lessens risks around working capital needs and the "very substantial" potential liabilities arising from the Dosco pension scheme, which had a 5.2m deficit at the end of 2009.

Scharf, a world-leader in mine railways, said the businesses complement its operations by adding technology and customers. It expects the purchase to boost its earnings this year.

Billington chief executive Steve Fareham said: "The acquisition complements SMT Scharf's core business of rail-bound railways in terms of both customers and technologies and allows us to focus on our core business of structural steel."

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Dosco made an 800,000 loss in 2009, based on 12.8m sales. Billington said the deal will contribute a 1.5m loss to its balance sheet, after costs.

"The group has received no contribution to group profits from these businesses in recent years... and was projected to have little or no prospect of doing so, as part of the continuing group, in the forseeable future," the group added.

Structural steel firms are doing their best to cuts costs and increase efficiency amid dire markets. Bigger rival Severfield-Rowen has described 2010 as the "trough" for the structural steel market.

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