The Rugby Group PLC announces toady that recent trading in its UK joinery business has been disappointing with volumes running well below expectations. The decline in the UK market that began to emerge in the second quarter of the year, identified t the time of the interim statement, has continued into the second half. As a result, UK joinery profitability has not shown the improvement expected.

Although good progress has been made in achieving the savings identified at the time of the Boulton & Paul acquisition in February 1997, operating profit in UK joinery has been adversely impacted since the half year by:

• A slower than expected recovery of sales following the cessation of supply to Jewson / Harcos plus competition from imports.

• A more rapid than expected shift in demand towards PVCu windows.

• Some distribution difficulties during the integration process, now largely resolved, that adversely affected sales to smaller customers.

In consequence, UK joinery profits in the second half of 1998 will show little advance on the first half of the year. Accordingly the Group’s pre-exceptional profit before tax in 1998 is likely to be below earlier expectations.

The Group is taking immediate steps to reduce costs and capacity in UK joinery. Up to 400 jobs are at risk at operations at Doncaster and Gloucester though new jobs will be created at other locations. The resulting costs will be reflected in the 1998 accounts as exceptional charges.

The Group confirms that trading in its other operations is broadly in line with expectations. In particular, the improvement in the Group’s US distribution operations, reported at the half-year, has continued. The major investment programmes in cement in the UK and Poland are running on time and on budget. The Group is in negotiation to sell its non-core US laminates activity, Pioneer Plastics Corporation.

The Board is continuing to explore opportunities to enhance shareholder value and is undertaking a review of the options for delivering value from all of its cement-related and non-cement activities.