Building Products

“Good performance in non-residential and infrastructure end markets was offset by the continuing weakness in the US residential construction market.”

Results from continuing operations

Sales decreased by 18.2% to £786.4 million (2006: £961.0 million) and adjusted operating profit was £53.2 million (2006: £83.8 million).

Air Systems Components
Air Systems Components had strong performance in the commercial construction market, taking market share with its focus on developing products for energy efficient or “green” buildings and focusing on growing segments such as public buildings and offices. The residential segment of Air Systems Components was impacted by lower volumes in the US residential housing market, but the business was able to minimise the impact of this downturn by controlling costs and driving operational efficiencies. 2007 saw good progress in expanding the Air Systems Components offering outside of the US into the rapidly growing Indian HVAC market. The business formed a joint venture with Caryaire, a manufacturer and distributor of HVAC products, and in January 2008 acquired a controlling stake in Rolastar, a duct profile manufacturer, both in India.

Other Building Products
Both the Lasco Bathware business and the Philips Doors and Windows business were impacted by the continuing weakness in the US residential housing market, combined with softer manufactured housing and recreational vehicle markets. Management reacted quickly to mitigate the impact on profits by closing two Bathware facilities and two Philips facilities in addition to reducing capacity, headcount and lowering expenses. Management will continue to manage the cost base and capacity during this cyclical downturn, whilst positioning the business for an eventual recovery in its end markets.