BHP quiet on ‘4th arm’

Press, 29 August 1986, Page 11

BHP quiet on ‘4th arm’

NZPA-AAP Melbourne The 1985-86 annual report of the Broken Hill ProprietAry Company, Ltd, does not attempt to revise forecasts for the current year, and provides no clues to the company's much vaunted plans to add a "fourth arm” to the company's petroleum, minerals, and steel divisions. The report, which comes amid persistent rumours of an imminent new attack by the Perth businessman, Mr Robert Holmes a Court, told shareholders how well their investment had done in recent years. But it gives no firm indications on the take-over front other than a definite impression that directors believe BHP shares — trading at just over 780 c compared with the last "inadequate” bid of about 900 c a share — were undervalued by the share market. BHP took the unusual step in February of preparing profit forecasts for the group for 1985-86 and 1986-87 because of a proposed takeover by Mr Holmes a Court’s Bell Resources, Ltd. The forecasts, based on an

oil price of SUSIB a barrel and an Australian dollar exchange rate of 65 U.S. cents, were for a lower group profit of sAust9BoM in 1986-87. But analysts have since predicted the profit will fall from 5988.2 M in 1985-86 to between S7BOM and S9OOM, mainly because of the poor crude oil price and resultant production cuts. The company said each SUSI cut in the oil price slashed profits about sAust24M, and every one U.S. cent fall in the exchange rate would lift profits about sAustlsM. BHP’s report said it expected group sales to rise this year but did not expect its total profit to increase. Directors said profits from petroleum and mining would be retarded by lower crude oil prices and reduced margins on steel-making minerals, but predicted continued strong performance from the steel business.

BHP’s managing director, Mr Brian Loton, announcing the 1985-86 results in July, refused to be drawn into revising the 1987 estimate.

“We don’t expect profits to increase at the same rate as they did in the past, but we will be trying very,'very hard now to equal the result we have just announced,” he said.

Mr Loton, at the same time, said BHP was waiting for the right chance to add a “fourth arm” to its operations.

In the report there was no further indication of the direction in which BHP would move.

“BHP will continue to seek out opportunities for investment or acquisition where these will accumulate attractive resources for future exploitation and lead to longterm prospects for growth and profit,” directors said.