Bottom Line: Few sparks fly down BICC's cables

BICC sells cables around the world to a range of industries from mature utilities to fast-growing communications - a good indication of the state of the global economy, you might think. If so, it is a pretty uninspiring picture.

Cost-cutting has at last had the desired effect in North America and BICC's cables business there is back in the black. But operating margins of only 3 per cent are hardly exciting and it will take a further strengthening of the economy there to achieve the doubled return that Sir Robin Biggam has targeted.

Elsewhere, the group's operations were as flat as a pancake in the first half.

In UK cables, communications grew but demand from the energy sector was weak. Spain improved, but Italy slipped. Restructuring of the German business, bought from the government, continues apace but the market is soggy.

Balfour Beatty, Britain's biggest road-builder, is thought to be one of the best-run construction companies. That, however, is unlikely to help in a market where wafer-thin margins are considered a luxury.

Yesterday's announcement of four privately financed road schemes cannot distract from the fact that returns are likely to be miserable for some years to come.

That means cash flow, which actually was not as bad as the headline pounds 94m outflow suggested, will remain under pressure. Sir Robin claims gearing is only 27 per cent but, as always with BICC, the figures used to calculate indebtedness are open to endless debate.

It is probably immaterial if, as promised, the company can raise pounds 100m from property disposals over the next year. But with Spitalfields in the books at what could best be called an optimistic valuation, question marks must hover over the rest of the portfolio.

On a prospective price/earnings ratio of 21, the shares are expecting a lot of recovery. After holding the barely covered dividend again the shares are probably better valued by reference to the 5.8 per cent yield. Fair, but unexciting.