Worst result in 35 years

Press, 10 May 1982, Page 32

Worst result in 35 years

PA Brisbane M.I.M. Holdings, Ltd, reported a sAust2o.4M loss for the first 40 weeks of the 1981-82 financial year, primarily because of slumping world metal prices. The directors also pointed to across-the-board rises in operating costs, high interest rates, and loss-making currency transactions, as contributing to MJ.M.’s. worst performance in 35 years. The over-all deficit includes a net operating loss of ?14M and a $6.4M extraordinary loss, because of currency fluctuations. The directors said the most significant factor affecting operating results was the continued depressed state of world metal prices. Sales revenues, they said, declined $102.3M compared with the same period last financil year. Although zinc prices firmed slightly during the period,copper and lead prices continued to decline, and silver prices, said the directors, fell dramatically. During the first four months of 1982 copper prices, in real terms, were at their lowest level in 35 years, the directors said. They said that during the period copper sales fell 20 per cent, lead by 15 per cent,

zinc by 34 per cent, and silver sales rose 7 per cent. Falling sales were the main cause of a $108.4M decline in after-tax earnings. Earnings were also reduced by sizeable operating cost increases, most notably a 17 per cent—or slo4M—rise in the cost of sales. The directors said that the impact of national and state wage determinations on the costs of labour, materials, and services had contributed heavily to higher operating costs.

; The high cost of borrowing money also caused havoc with M.l.M.’s balance sheet, the directors said.

To finance a S3B2M captial expansion and investment programme during the period, the group dipped into its cash reserves and needed to borrow because of a cash flow problem caused by the sales slowdown.