Restructure helps H. Smith to record

Press, 6 September 1989, Page 40

Restructure helps H. Smith to record

NZPA-AAP Sydney A major restructuring and the sale of part of its coal operations enabled Howard Smith to post a record net profit of sAustso.6 million (SNZ6S.2M) for the year ended June 30.

The result compares with last year’s loss of SI.2M and was achieved on revenue of $90.39M, down 10.2 per cent because of the sale of some businesses.

Howard Smith’s 42 per cent associate Coal and Allied Industries (CAIL), to whom it sold its coal interest R.W. Miller (Holdings) for $186.6M in May, also announced an annual net profit of 516.34 M for the same period. It represents a turnaround of $19.05M from 1987-88 and was achieved, despite a loss in CAIL’s coal operations, after a restructuring which included the sale of some collieries. Howard Smith chief executive, Mr Allan Thomson, said all divisions of the group, except

for heavy engineering, contributed to the turnaround in earnings. He said production of open cut coal also suffered because of heavy rain in the first six months of 1989 and continued industrial disruption at some pits.

Profits from the maritime sector increased and its industrial products and steel distributor, J. Blackwood and Son, achieved a record turnover of $323.3M. Heavy engineering subsidiary, A. Groninan and Co’s earnings fell because of commissioning problems with the Tangara double-deck rail cars being built for the State Rail Authority. “Most of the profit has come from restructuring — we had too much money tied up in assets that were not giving proper returns,” Mr Thomson said.

“We see an extremely good year coming up. We would like to see growth in our four core areas, and apart from organic growth we are still look-

ing for opportunities. “We are now cash positive and have a good borrowing capacity.” CAIL chief executive, Mr Tony Haraldson, said coal still was losing money but the company had benefited from rationalisation that included the sale of the Liddell and Preston Extended collieries, the sale of South Maitland Railways and of ■ Thomas Brown, Ltd, in New Zealand. “Production difficulties at the open cuts were exacerbated by the continuing wet weather experienced during the January-June period,” he said. Howard Smith directors have predicted a 17.5 c final dividend expected to be franked to 10c a share. This brings the year’s total dividend to 27.5 c a share, franked to 13.2 c. CAIL directors will declare a final ordinary dividend of 10c a share, expected to be franked at 3.5 c a share, bringing the total dividend to 16c, franked to 7c.