Commercial B.H.P. forecasts profit

Press, 22 February 1978, Page 22

Commercial B.H.P. forecasts profit

NZPA Melbourne The Broken Hill Proprietory Company, Ltd, expects that its net profit in the current half-year to May 31 will be about the same as the profit in the six months to November 30. The net profit of $38.7M was 5.7 per cent higher than the previous corresponding half-year, and was after an increase of $3.6M, to $4.6m, in minortiy interests and extraordinary items. In the latest six months the loss on steel increased 62.0 per cent to $35.1M, , but minerals profit rose 45.0 per cent to SIB.OM and petroleum profit rose 33.4 per cent to $54. IM.

The profit from other subsidiaries, and investments, fell 7.9 per cent to $6.3M.

Sales revenue rose 10.0 per cent to 5U92.2M..

Interest expenses rose $6.5M to $3B. IM; income tax provision was $2.3M higher at $91.9M, and fixed asset utilisation expenses were estimated to be $11.4M higher, at $139.5M.

Improved profitability from steel depends on the company achieving a more competitive cost-structure, and on market conditions becoming more favourable, the report says. The labour-force has been reduced, because of lower demand, for steel products. While efforts are being made, with some success, to seek additional export outlets, increased economic activity in Australia and overseas is needed before an adequate return on funds invested in steel can be realised, it says. The demand for steel on the Australian market is showing a small improvement, but with the world problems in the steel industry, growth in demand for steelmaking raw materials cannot be expected in the short-term.

A more realistic approach to pricing in the Australian budget last year gives confidence in the group’s petroleum activities, subject to the effect of any secondary tax.

The group’s Whyalla shipbuilding activities are ex-

pected to cease at the end of the current building programme in June. The joint-venture study into the feasibility of the Ok Tedi porphyry copper prospect, in Papua New Guinea, progressed according to schedule, and extensive diamond drilling confirmed previously indicated reserves of copper ore, and significant gold values. Engineering studies, and other field investigations are well advanced, but no firm conclusions can yet be reached under the concession agreement with the Papua New Guinea Government. Discussions have continued on the development of an oil field off the east coast of West Malaysia, which was discovered by a consortium in which B.H.P. had a 25 per cent interest.

One of the original participants has withdrawn, and B.H.P.’s share has risen to 33 1/3 per cent, subject to a reduction in the event of a farm-in by Petronas the Malaysian Government petroleum organisation, B.H.P. says.