20 May 1999: British industrial gases company BOC Group Plc said that its goal to reduce company costs was in sight.
BOC chief executive Danny Rosenkranz said in a statement with the company“s first…
20 May 1999: British industrial gases company BOC Group Plc said that its goal to reduce company costs was in sight. BOC chief executive Danny Rosenkranz said in a statement with the company“s first-half earnings that BOC will meet its target to cut its overall annual costs by UK 120 million (US$ 195.3 million) by April 2000 in a programme which will see a UK 50 million cut this year alone. “We are also in sight of our goal to achieve a reduction of UK 120 million a year in costs by the end of our next financial year,” Rosenkranz said. But in a surprise development, recent press reports have said that BOC was in talks with US-based Praxair to create the world“s largest industrial gases group. BOC“s results statement made no mention of any talks. In a company statement, Praxair said it had seen the media reports about a possible merger with BOC Group, and that “consistent with its longstanding policy, Praxair declines to comment on matters of rumour and speculation.” Praxair is the largest industrial gases company in North and South America, and one of the biggest worldwide, with 1998 sales of US$ 4.8 billion. The two groups are of comparable size, with BOC“s market capitalization at UK 5.04 billion based on a recent closing share price of UK 10.31-1/2. The reports said each company holds a share of about 15% of the global gases market. France“s Air Liquide has about 17% while Air Products of the US is in fourth position with around 8%. Rosenkranz said BOC was in the middle of a critical year and that the restructuring programme started in August was expected to transform the company into a global high performance company. “Our goal is nothing less than to re-build BOC into a high-performing global company, poised for success in tomorrow“s markets,” he said. He said he felt the establishment of main business lines with their own detailed strategies and the new appointment of heads for those lines with agreed performance contracts have led to the emergence of a new spirit in BOC. “The signs are very evident to me. I see people revitalized as they respond with a greater sense of purpose and enthusiasm to targets designed to stretch their performance,” he said. “I see a company starting to collaborate as a whole.” BOC reported that its pre-tax pre-exceptional profits fell 2% to UK 177.4 million in the six months ending 31 March 1999 compared with UK 181.2 million in the first half ending 31 March 1998. In August, BOC announced the start of a major shake-up with 5,000 job losses worldwide – out of a global workforce of 38,000 – designed to put the company back on the path of sustained profit growth. Under Rosenkranz“s blueprint, BOC will be organized globally along four different business streams. They will be BOC Process Systems, which provides large-scale on-site industrial gas supplies mainly for the chemical, petroleum and metal industries; Industrial and Special Products aimed at smaller-scale gas users; BOC Edwards which provides services to the semi-conductor industry; and Bulk Gases, targeted at industries like glass-making and food processing.