BHP well ahead

Press, 17 December 1988, Page 32

BHP well ahead

NZPA-AAP Melbourne The Broken Hill Proprietory Company has easily surpassed projections for its interim result, posting an sAusts23.B million (SNZ7I6.2M) net profit for the six months to November 30. BHP said in a statement the 9.3 per cent profit lift reflected strong performances from its business groups, particularly steel, on which profits were up 119 per cent. The result, directors said, was despite a strong local currency and poor oil prices. The two factors were behind a 1.5 per cent fall in sales to sAusts.32 billion, it said. Other revenue rose 17.21 per cent to $274.9M but first-half earnings rose 34 per cent to 41c a share and the return on shareholders’ funds was 17 per cent compared with 12.5 per cent. Operating profit (after interest and depreciation) was down 3.86 per cent at $833.7M (compared with

5867.2 M). However, operating profit after “income tax attributable to operating profit” was up 9.2 per cent at $539.1M. BHP said strong cash flow, including sAustl.Os billion in asset sales, and the higher exchange rate on United States dollar denominated debt helped push gearing to 49.2 per cent compared with 54.8 per cent at the start of the half-year. The company said sAust64l.2M was invested in assets, sAustlO7.BM in petroleum exploration and sAust46.BM in minerals exploration during the half. Included in the projects are the North West Shelf LNG Project, the Escondida copper project in Chile, and oil and gas developments in the North Sea, Gulf of Mexico, Bass Strait, and the Timor Sea. BHP’s steel group was the top earner in the half with a sAust2l9.7M profit compared with sAustloo.2 million. Minerals came in with a sAustlBB.sM profit from

sAustl76.4M and petroleum was down at sAustl46.lM against sAust2o6.9 million. BHP said healthy order books into the New Year meant steel would continue to make a strong contribution, and strong demand in iron ore and metallurgical coal should lead to price rises. It said its longer term outlook for petroleum has encouraged its commitment to oil explorations. "Over all, the company is performing well in producing and selling commodities and services,” BHP said. "Some of our important activities are sensitive to fluctuations in the relative value of the Australian dollar and if the value remains high and oil prices remain low, profits will be reduced. "The third quarter will also be affected by summer holiday shutdowns which will result in reduced steel deliveries. "However, the outlook is for a continuing strong demand for most of our products.”