BHP First Quarter Profit Report.SAN FRANCISCO--(BUSINESS WIRE)--Sept. 20, 1996-- -0-
BHP First Quarter Profit Report
-------------------------------
August 1996
-----------
Quarter ended
-------------
31 August
---------
Results Summary 1996 1995 Change
--------------- ---- ---- ------
Operating revenue ($ million) 5,089 4,782 +6.4% Operating profit attributable to BHP shareholders ($ million) 287 372 -22.8% Basic earnings per share (cents) 17.6 23.3 -24.5% Significant Features --------------------
-- Separation of BHP's copper assets into a new Copper Group
-- Half yearly dividend of 25.0 cents per share fully franked at 36
cents in the dollar
Directors today announced an operating profit after income tax
attributable to BHP shareholders of $287 million, a decrease of
$85 million or 22.8% from the corresponding period
(August 1995 quarter). There were no abnormal items in either
quarter.
Basic earnings per share were 17.6 cents. Comparative earnings
per share for 1995 were 23.3 cents. The lower earnings per share
reflects the lower quarterly result together with the increased
average number of shares on issue.
Although the profit attributable to BHP shareholders was down
22.8% on the corresponding period, the profit for this quarter
represents an increase of 10.8% on the quarter ending 31 May
1996 and an increase of 28.7% on the quarter ending 29
February 1996, excluding abnormal items.
Consolidated Group Results --------------------------
Operating profit before depreciation, interest expense and income
tax, at $1,214 million, was 5.8% lower than for the
corresponding period, but higher depreciation and amortisation and
increased interest expense resulted in pre-tax profit being down by
23.8%.
The major factors affecting the operating results of the Business
Groups, when compared with the results of the corresponding period
were:
-- Minerals - provision for a $45 million loss (no tax
effect) from sale of the Mali (Africa) gold assets;
-- Copper - lower realised copper prices and disappointing
results from the North American operations;
-- Steel - lower results from the Flat Products and Long Products
Divisions mainly due to lower average export prices and lower
Australian domestic despatches, partly offset by the inclusion of
Tubemakers' results;
-- Petroleum - a profit of $50 million (after tax) from the
sale of BHP's share in the Mungo/Monan (UK) development, together
with higher crude oil and natural gas prices, increased refining
margins and lower depreciation following the write-off of the Dai
Hung (Vietnam) oilfield assets in May 1996; and
-- the adverse impact of the higher A$/US$ exchange
rate which averaged 79 cents compared with 73 cents for the
corresponding period.
Group sales and other revenues of $5,089 million increased
by $307 million or 6.4% from the corresponding period.
The major factors affecting August 1996 quarter revenues were:
-- Minerals - lower shipments of coal, ferro alloys and manganese
ore;
-- Copper - the inclusion of the former Magma assets partly
offset by significantly lower copper prices;
-- Steel - the Tubemakers acquisition;
-- Petroleum - the sale of BHP's share in the Mungo/Monan
development in the North Sea and higher crude oil prices; and
-- the adverse A$/US$ exchange rate.
Depreciation and amortisation charges increased by $44
million to $473 million. The increased charge was principally
from Copper and reflects the Magma acquisition and commissioning of
new plant, primarily at Escondida (Chile). The charge for Petroleum
was lower as the corresponding period included depreciation on the
Dai Hung assets which were written off in May 1996.
Interest expense increased by $64 million to $155
million reflecting higher funding and lower capitalised interest,
partly offset by lower average interest rates.
Income tax expense attributable to operating profit was $254
million, a decrease of $58 million from the corresponding period.
The charge for the quarter represented an effective tax rate of 43.3%
(1995 - 40.6%) which exceeded the nominal Australian tax rate of
36% due mainly to non- deductible accounting depreciation and
amortisation, non-deductible loss on sale of assets and exploration
expenditure in countries for which no deduction is presently
available.
Business Group Results (after income tax) -----------------------------------------
Quarter ended 31 August
1996 1995(1) Change
---------------------------
$ million $ million %
Minerals 76 126 -39.7 Copper 85 191 -55.5 Steel 90 146 -38.4 Petroleum 189 62 +204.8 Service Companies 20 6 +233.3 Net unallocated interest (89) (49)
Corporate and unallocated items (39) (25)
---------------------------
Operating profit before outside equity interests 332 457 -27.4
Outside equity interests (45) (85)
---------------------------
Operating profit attributable to
members of the BHP Entity 287 372 -22.8
===========================
(1) Comparatives have been restated, refer to Segment Results. Minerals --------
Minerals' profit for the quarter was $76 million, $50 million
below the profit for the corresponding period after including a loss
of $45 million to reflect provision for sale of the Mali gold assets.
Higher US$ iron ore and coal prices had a favourable impact on the
results, together with lower unit costs at the Western Australia iron
ore operations due to higher production. However, these factors were
more than offset by an unfavourable A$/US$ exchange rate, lower
shipments and higher costs at the New South Wales collieries.
During the quarter Minerals spent $38 million (1995 - $47
million) on exploration activity, of which $36 million (1995 - $28
million) was charged to profit.
Significant developments for the quarter included:
-- acquisition of additional interest in the Queensland coal
mines. The interest in Central Queensland Coal Associates increased
from 44.72% to 47.62% and in the Gregory joint venture from 55.05% to
58.62%;
-- the Newman (Western Australia) power station was connected to
the goldfields gas transmission pipeline in June and commenced
generating power for the Mt Whaleback mine and the Newman township;
-- the Northwest Territories Diamond project (Canada) was granted
conditional approval by the Canadian federal cabinet on 8 August
1996; and
-- ore production from the Yandi (Western Australia) expansion
project commenced in August 1996.
Copper ------
Copper's profit for the quarter was $85 million, 55.5% below the
profit of $191 million for the corresponding period. The effect of
significantly lower copper prices, which adversely impacted profit by
approximately $150 million, and disappointing results from the North
American operations were partly offset by higher despatches.
Sales revenue for the quarter was $759 million, 15.2% above that
for the corresponding period. Total copper despatches were 77%
higher than for the corresponding period, primarily due to the
acquisition of Magma, but also reflecting the record production
levels achieved at Escondida following commissioning of the Phase III
expansion in May 1996.
The average price booked for copper shipments in the quarter was
US$0.95 per pound (1995 - US$1.36). Price finalisation adjustments
after tax (representing prior period shipments settled in the
quarter) were an unfavourable $6 million (1995 - $27 million
favourable). Unhedged copper shipments not finalised at 31 August
1996 have been brought to account at US$ 0.90 per pound. The London
Metal Exchange copper spot price at Friday 30 August 1996 was US$
0.92 per pound. For the balance of this financial year 39% of
anticipated shipments are covered by put options at US$0.95 per pound
and 10% by forward contracts at US$1.07 per pound.
Operations of the North American divisions were adversely
affected by throughput and recovery problems at the Robinson mine in
Nevada, low ore grades at the San Manuel and Pinto Valley mines in
Arizona, high refining and treatment charges for the Tintaya mine in
Peru and the San Manuel smelter maintenance shutdown in August 1996.
Integration of the former Magma assets is now complete with the
headquarters of BHP Copper established in San Francisco. In order to
maximise shareholder wealth from our larger copper business, actions
have been put in place to bring to Copper the full resources of BHP
to expedite improved performance.
Exploration spending totalled $18 million for the quarter,
compared to $13 million in 1995. These expenditures were charged to
profit during the respective periods.
Significant developments for the quarter included:
-- agreement with representatives of the Ok Tedi and Fly River
communities which will resolve the environmental and community issues
associated with the Ok Tedi mine in Papua New Guinea, subject to
implementation of the waste/tailings solution; and
-- Escondida operating near capacity following commissioning in
May 1996 of the Phase III expansion.
Steel -----
Steel's profit for the quarter was $90 million, 38.4% below the
corresponding period. Reduced results from the Flat Products and
Long Products Divisions were partly offset by higher profits from the
Building and Industrial Products and International Divisions.
Building and Industrial Products Division now includes the Australian
operations of Tubemakers.
Sales revenue for the quarter increased by 11.6% due to the
Tubemakers acquisition, higher export volumes and increased sales
from overseas operations, partly offset by lower Australian domestic
despatches and lower average export prices. Prices for low
value-added products exported from Australia were weak due to an
oversupply on world markets, and this weakness extended into some
higher value-added products.
Raw steel production in Australia and New Zealand of 2.159
million tonnes was in line with last year whilst steel despatches
from all operations were 2.018 million tonnes, 7% above the
corresponding period. Domestic despatches from Australian operations
were 1.060 million tonnes, a decline of 3% which was partly due to a
flat domestic market, although there are signs of some improvements
in demand for structural, reinforcing and flat products. Exports
from Australia were 21% higher at 701,000 tonnes. Despatches from
New Zealand Steel were 21% higher at 164,000 tonnes. Increased
despatches from new coating facilities in the United States helped
lift despatches from other overseas plants by 12% to 93,000 tonnes
for the quarter.
Raw materials and labour costs were also higher in the August
1996 quarter than for the corresponding period due to increased
prices for coal and iron ore, higher wage rates and early retirement
payments, partly offset by better manufacturing performance.
Significant developments for the quarter included:
-- commissioning of No. 6 Blast Furnace in June and the
decommissioning of No. 2 Blast Furnace in July at the Port Kembla
Steelworks; and
-- commissioning in August of the slitting and recoiling line
(part of the coating lines facility) at Kapar, Malaysia.
Petroleum ---------
Petroleum's profit for the quarter was $189 million, an increase
of $127 million compared to the corresponding period. The result
included a profit of $50 million for the sale of BHP's share in the
Mungo/Monan development.
In addition to the asset sale, the increase in profit resulted
from higher realised prices for crude oil and natural gas, higher
margins from the company's Hawaiian refinery, lower operating costs,
and lower depreciation. The average realised oil price for the
quarter was A$25.79 compared with A$23.66 for the corresponding
period reflecting higher US$ prices partly offset by higher A$/US$
exchange rates.
During the quarter, Petroleum spent $103 million (1995 - $83
million) on exploration activity, of which $65 million (1995 - $71
million) was charged to profit.
Oil and condensate production was in line with the corresponding
period, with the commencement of oil production from Cossack/Wanaea
(Australia) in November 1995 and initial production from Liverpool
Bay (UK) in January 1996 offsetting lower production from Griffin
(Australia) and natural field declines.
Natural gas production was also in line with the corresponding
period. Higher demand in the United Kingdom, the commencement of
production from Liverpool Bay and higher LNG production from the
North West Shelf (Australia) more than offset lower demand for Bass
Strait (Australia) gas and the impact of the sale of producing
properties in North America and offshore Netherlands. LPG production
was higher due to commissioning of the North West Shelf facilities in
November 1995.
Significant developments for the quarter were:
-- further appraisal of the Undan-Bayu gas and condensate
discovery in the Australian/Indonesian Zone of Co-operation, with
encouraging results from the Undan-4 appraisal well. There were also
encouraging results from the Moran-1 exploration well in Papua New
Guinea;
-- the award by the US Minerals Management Service of 64 Gulf of
Mexico blocks in the April 1996 lease sale; and
-- completion of the Bream B and West Tuna concrete gravity
storage structures. Tow-out of these two Bass Strait platforms is
expected in the fourth quarter of calendar 1996.
Service Companies -----------------
Service Companies' profit for the quarter was $20 million
compared to $6 million for the corresponding period. This was
attributable to better results from Insurance and Transport,
primarily due to the adverse effect in the corresponding period of
the Iron Baron grounding. The improved Transport result was partly
offset by additional drydocking expenditure during the quarter.
Corporate and unallocated items -------------------------------
Corporate and unallocated items reported a loss of $39 million
which compares with a loss of $25 million for the corresponding
period. The variation was mainly due to decreased Treasury results
on inter-group transactions, with corresponding benefits reflected in
Business Groups.
Outside Equity Interests ------------------------
Outside equity interests' share of operating profit decreased due
mainly to the lower results of Ok Tedi Mining Limited.
Consolidated Group Results --------------------------
Quarter ended 31 August
1996 1995 Change
-----------------------------
$ million $ million %
Operating revenue
Sales 4 843 4 716 +2.7
Interest revenue 30 26 +15.4
Other revenue 216 40 +440.0
-----------------------------
5,089 4,782 +6.4
-----------------------------
Operating profit before
depreciation, amortisation and
interest expense 1,214 1,289 -5.8
Deduct:
Depreciation and amortisation 473 429 +10.3
Interest expense(1) 155 91 +70.3
-----------------------------
Operating profit before income tax 586 769 -23.8
Deduct:
Income tax expense attributable to
operating profit 254 312 -18.6
-----------------------------
Operating profit after income tax 332 457 -27.4
Deduct:
Outside equity interests in
operating profit after income tax 45 85 -47.1
-----------------------------
Operating profit after income tax,
attributable to members of the BHP
Entity 287 372 -22.8
=============================
Average A$/US$ hedge settlement rate 79 cents 73 cents (1) Excludes capitalised interest of $37 m $48 m Segment Results (1) --------------- Quarter ended 31 August -----------------------
$ million
-----------------------------------
Minerals Copper Steel Petroleum
-----------------------------------
1996
-----------------------------------
Operating revenue(3)
Sales 1,076 759 2,093 972
Other revenue 40 16 13 140
-----------------------------------
1,116 775 2,106 1,112
-----------------------------------
Operating profit 244 225 260 469 Deduct: Depreciation and amortisation 99 90 121 145
Interest expense - - - -
-----------------------------------
Operating profit
before income tax 145 135 139 324
Deduct:
Income tax 69 50 49 135
-----------------------------------
Operating profit
after income tax 76 85 90 189
-----------------------------------
$ million
----------------------------------------------
Corporate
Net and
Service unallocated unallocated BHP
continued Companies interest items (2) Group
----------------------------------------------
1996
----------------------------------------------
Operating revenue(3)
Sales 494 - 7 4,843
Other revenue 5 28 4 246
----------------------------------------------
499 28 11 5,089
----------------------------------------------
Operating profit 46 28 (58) 1,214 Deduct: Depreciation and amortisation 15 - 3 473
Interest expense - 155 - 155
----------------------------------------------
Operating profit
before income tax 31 (127) (61) 586
Deduct:
Income tax 11 (38) (22) 254
----------------------------------------------
Operating profit
after income tax 20 (89) (39) 332
----------------------------------------------
$ million
-----------------------------------
Minerals Copper Steel Petroleum
-----------------------------------
1995
-----------------------------------
Operating revenue(3)
Sales 1,130 659 1,875 1,024
Other revenue 28 1 6 2
-----------------------------------
1,158 660 1,881 1,026
-----------------------------------
Operating profit 293 343 330 314 Deduct: Depreciation and amortisation 93 31 113 176
Interest expense - - - -
-----------------------------------
Operating profit
before income tax 200 312 217 138
Deduct:
Income tax 74 121 71 76
-----------------------------------
Operating profit
after income tax 126 191 146 62
-----------------------------------
$ million
----------------------------------------------
Corporate
Net and
Service unallocated unallocated BHP
continued Companies interest items (2) Group
----------------------------------------------
1995
----------------------------------------------
Operating revenue(3)
Sales 528 - 24 4,716
Other revenue 4 25 - 66
----------------------------------------------
532 25 24 4,782
----------------------------------------------
Operating profit 23 25 (39) 1,289 Deduct: Depreciation and amortisation 14 - 2 429
Interest expense - 91 - 91
----------------------------------------------
Operating profit
before income tax 9 (66) (41) 769
Deduct:
Income tax 3 (17) (16) 312
----------------------------------------------
Operating profit
after income tax 6 (49) (25) 457
----------------------------------------------
(1) Figures reflect the formation of the new Copper Group, Collieries being transferred from Steel to Minerals, Power from Corporate to Service Companies and Research from Steel to Corporate. Comparatives have been restated accordingly. (2) Includes consolidation adjustments. (3) Operating revenues do not add to the BHP Group figure due to intersegment transactions. Additional Information ---------------------- Quarter ended 31 August -----------------------
Sales analysis (1) 1996 1995 Change
-----------------------------
$ million $ million %
Minerals Coal 641 673 -4.8 Iron Ore 337 327 +3.1 Manganese 77 109 -29.4 Copper Copper 681 573 +18.8 Gold 70 76 -7.9 Steel Flat Products 1 016 1 113 -8.7 Long Products 461 432 +6.7 Building and Industrial Products 687 303 +126.7 International 440 353 +24.6 Petroleum Crude Oil 451 432 +4.4 Natural gas 117 108 +8.3 LNG 76 72 +5.6 Refined Products 385 379 +1.6 LPG 53 42 +26.2 Service Companies Transport 339 354 -4.2 Engineering 79 80 -1.3 Information Technology 60 73 -17.8 (1) Sales do not add to the BHP Group and Segment figures due to intersegment and intrasegment transactions. Minor items are not separately disclosed. Additional Information ---------------------- Quarter ended 31 August ----------------------- Capital and investment expenditure (1)
Capital Investment Capital Investment
expenditure expenditure Total expenditure expenditure Total
----------------------------- -----------------------------
1996 1995
$ million $ million
----------------------------- -----------------------------
Minerals 484 - 484 200 56 256
Copper 39 - 39 98 - 98
Steel 189 56 245 182 20 202
Petroleum 104 - 104 210 - 210
Service
Companies 28 1 29 18 3 21
Corporate 30 - 30 4 - 4
----------------------------- -----------------------------
Total 874 57 931 712 79 791
==========================================================
(1) Excludes capitalised interest and capitalised exploration Exploration expenditure
Add:
Previously
Gross Less: capitalised Charged
exploration Capitalised now to
expenditure expenditure written-off profit
-------------------------------------------------
1996
$ million
-------------------------------------------------
Minerals 38 2 - 36
Copper 18 - - 18
Petroleum 103 38 - 65
-------------------------------------------------
Total 159 40 - 119
-------------------------------------------------
Add:
Previously
Gross Less: capitalised Charged
exploration Capitalised now to
expenditure expenditure written-off profit
-------------------------------------------------
1995
$ million
-------------------------------------------------
Minerals 47 19 - 28
Copper 13 - - 13
Petroleum 83 12 - 71
-------------------------------------------------
Total 143 31 - 112
-------------------------------------------------
Additional Information
----------------------
Quarter ended 31 August
-----------------------
1996 1995
-----------------
Basic earnings per share (cents) (1) 17.6 23.3
Earnings per American Depositary Share (US$) (2) 0.28 0.35 (1) Based on operating profit after income tax attributable to members of BHP divided by the weighted average number of $1.00 fully paid shares. The weighted average number of shares (1,628,464,341) excludes BHP shares held by Beswick. BHP shares held by Beswick at period end were 338,066,630 (1995- 338,066,630). Diluted earnings per share is not reported as it is not materially different from basic earnings per share. (2) Each American Depositary Share (ADS) represents two ordinary $1.00 shares. Translated at the noon buying rate on Friday 30 August 1996 as certified by the Federal Reserve Bank of New York A$1=US$0.7910 (1995 A$1=US$0.7517).
The financial data upon which this report has been based complies
with the requirements of the Corporations Law, with all applicable
Australian Accounting Standards and Urgent Issues Group Consensus
Views, and gives a true and fair view of the matters disclosed. The
results are unaudited. The Company has a formally constituted Audit
Committee of the Board of Directors.
Details of equity accounting are not included in this report.
Half Yearly Dividend --------------------
Directors are pleased to announce that a half yearly dividend
will be paid on 27 November 1996 at the rate of 25.0 cents per $1.00
fully paid ordinary share, the same as the dividend in the
corresponding period. The dividend will be fully franked at 36 cents
in the dollar.
The books' closing date (or record date) for payment of the
dividend will be 8 November 1996.
Shareholders who prior to 20 September 1996 elected to
participate in the Company's Bonus Share Plan and/or Dividend
Investment Plan will receive shares in accordance with those plans.
American Depositary Shares (ADSs) each represent two ordinary
$1.00 shares and receive dividends accordingly. The record
date for ADSs is 7 November 1996.
Transfer documents will be accepted for registration at the
Company's share registers (and in the case of ADSs the US Depositary)
at the following addresses:
Australia 600 Bourke Street
Melbourne 3000
UK Australian Shareholder Services Ltd
5th Floor, Bowman House
29 Wilson Street
London EC2M 2SJ
USA Morgan Guaranty Trust Co of New York
60 Wall Street
New York NY 10260-0060
CONTACT: The Broken Hill Proprietary Company Limited Pierre Pierre (pēr), city (1990 pop. 12,906), state capital (since 1889) and seat of Hughes co., central S.Dak., on the east bank of the Missouri River, opposite Fort Pierre; inc. 1883. Hirsch Hirsch (deer in German and Yiddish) may refer to:
|
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion