CSR sees steady profit

Press, 9 July 1983, Page 21

CSR sees steady profit

PA Sydney CSR, Ltd, sees a tough year ahead in 1983-84, but the directors expect profit to be no worse than last year’s sAust74.7 million, the general manager, Mr Bryan Kelman, said. CSR intends to trim capital expenditure by about sAust6o million to $3OO million and is also aiming to free sAustlso million through investments in the current year, Mr Kelman said.

He said the divestments were part of the group’s long-term plans, and were not a new project for the current year. Of the $l5O million to be divested, $66 million would come from the sale-and-lease-back arrangement already made for the group’s Sydney headquarters as well as a sizeable amount from the yet-to-be-approved sale of the Wunderlich tile business to Monier, Ltd. s A further amount of $2O- - million would come from a major deal to be completed in Australia in the current year, but Mr Kelman would not disclose details.

CSR plans to concentrate more on its aluminium interests in the current year, and has plans to expand both in Australia and overseas.

In an interview ahead of the release of the group’s

annual report, Mr Kelman said that aluminium production is a low-cost venture in Australia.

Mr Kelman said negotiations were continuing for CSR to participate in the aluminium industry in Canada.

Talks are being held with Pechiney Ugine Kuhlmann with a view to joining Pechiney in its Canadian aluminium expansion. The buoyant signs for aluminium come after a rise in prices for the metal to SUSI4BO a tonne by the end of May, coinciding with the completion of about 83 per cent of the Tomago smelter’s first stage in NSW.

Tomago is scheduled to reach full production in 1984.

Mr Kelrtian said he hoped CSR could become involved in all stages of aluminium production up to the ingot stage in Australia. On prospects for the current year, Mr Kelman said the group’s aim was for profit to be no worse than last year’s earnings of sAust74.7 million which was about $8.2 million down on the previous year. He said that the going would be tough, with the group planning to cut capital expenditure by about sAust6o million to $3OO million and to gain sAustlso million through divestments. Mr Kelman said divest-

ments were part of the group’s long term plans and not specially designed to cope with the current year problems. A further $2O-25 million would come from an undisclosed deal to be completed in Australia this year. Mr Kelman acknowledged that the $19.3 million provision for future exchange losses shown in the balance sheet was a very large sum, and a currency-hedging and advisory group had been set up within CSR to cope with this.

Most of the CSR overseas deals were in US dollars and any losses would be likely to be offset by gains through the new currency advisory centre.

It was not intended that the group would operate on the hedge market but would advise and guide CSR in its multi-currency operations, Mr Kelman said.

On the group’s coal interests, Mr Kelman hoped that union unrest on the coal fields would abate and enable CSR to achieve its goals. CSR, like other major coal exporters, has had to accept the Japanese deals involving lower prices and delivery contracts, Mr Kelman said.

In talks with the Japanese steel groups, Mr Kelman said he had found them to be in the same difficult position as Australia, and they had expressed the hope

that renegotiated contracts in the future would be on a much better basis.

Commenting on the BHPUtah deal under which BHP plans to acquire Utah’s Australian coal mining interests, Mr Kelman said CSR was surprised by the BHP move. The Thiess Dampier Mitsui consortium, 22 per centowned by CSR, and 60 per cent owned by BHP, was very much involved, and negotiations were continuing, Mr Kelman said. On sugar, Mr Kelman said there would be a downturn in output this year because of the drought, but the problems of the European sugar beet producers who had suffered a very wet season were ones from which CSR would benefit.

Oil and gas, chemicals, building materials, and minerals would all have their problems in 1983-84, but the annual report showed fairly healthy expectations for all these areas.

Recruiting has been curtailed but of the 1300 jobs lost at CSR last year only 500 were actual retrenchments, Mr Kelman said. Year-end working capital for the group showed an increase of 43 million dollars.

After allowing for changes in stocks, debtors and creditors and adjusting for non-cash items, liquidity rose $3B million.