Comalco 1998 Half Year Results.LONDON--(BUSINESS WIRE)--Aug. 24, 1998--Rio Tinto Tin´to n. 1. A red Madeira wine, wanting the high aroma of the white sorts, and, when old, resembling tawny port. plc (NYSE NYSE See: New York Stock Exchange : RTP (1) (Rapid Transport Protocol) The protocol used in IBM's High Performance Routing (HPR) system. (2) (Realtime Transport Protocol) An IP protocol that supports real time transmission of voice and video. ) today announced that Comalco's 1998 first half year operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. after tax on a joint venture basis rose by 78% to $123.8 million (compared with $69.6 million for the same period in 1997). Directors have declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a half year dividend of 10 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . As foreshadowed, the dividend is unfranked. Commenting on the $54 million increase in profit, Chief Executive, Mr Terry Palmer Terry Palmer (born 26 April 1972 in Dublin) was an Irish soccer player during the 1990s and 2000s. He made his University College Dublin A.F.C. debut on the 27th of January 1991 and played for the club for seven seasons before transferring to Shamrock Rovers in 1998. said, "We have maintained momentum on the turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in operating performance, building on the benefits locked in last year. This result clearly demonstrates the continuing success of Comalco's cost improvement program and the benefits of new, low cost production from the Boyne Boyne, river, c.70 mi (110 km) long, rising in the Bog of Allen, Co. Kildare, E Republic of Ireland, and flowing NE through Co. Meath, past Trim, to the Irish Sea near Drogheda. Salmon is caught in the river. smelter expansion." "The result reflects the valuable improvement ideas being put forward by our employees. We have extended the performance enhancement program to the Boyne Island smelter and the Brisbane Brisbane (brĭz`bən), city (1991 pop. 1,145,537), capital of Queensland, E Australia, on the Brisbane River above its mouth on Moreton Bay. head office. The program will move to Weipa by early next year. I believe this program will continue to lower costs and improve profitability." "The improved result was achieved despite lower London Metal Exchange London Metal Exchange (LME) A market for trading base metals, where traded options contracts are available against the underlying futures contract. (LME See London Metal Exchange. LME See London Metal Exchange (LME). ) aluminium prices and continued weakness in Asian markets. These factors were offset by a weaker Australian dollar Noun 1. Australian dollar - the basic unit of money in Australia and Nauru dollar - the basic monetary unit in many countries; equal to 100 cents and a 25% increase in metal sales volumes." "Mining & Refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar enjoyed higher sales volumes and continued to make a strong contribution. The three smelters produced a total of 457,000 tonnes of metal, of which Comalco's share was 320,000 tonnes. Apart from some teething teething /teeth·ing/ (teth´ing) the entire process resulting in eruption of the teeth. teeth·ing n. The eruption or cutting of the teeth. problems at the Boyne Island smelter line 3, the smelters operated very efficiently. Profit contribution by the Smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. business was substantially higher than the same period last year." "While market conditions for aluminium in Asia (which accounts for about 25% of world consumption) are difficult, sales into the region have been maintained at levels similar to last year. We are hopeful that demand for aluminium from Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). and North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. will remain strong. The key factor in Asian markets is Japan's ability to move toward economic recovery in the near term." N. B. All $ are Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. , unless otherwise stated. -0-
SUMMARY OF FINANCIAL RESULTS
(Joint venture basis)
Comalco's consolidated results for the half year to June 30,
1998, including its equity in the results of consortium companies, are
shown below, along with comparative results for 1997. The 1998 and
1997 half year results have been subject to review, but not full
audit, by the external auditors.
Half year Half year Year
1998 1997 Change 1997
$ million $ million % $ million
Sales revenue 1,034.1 843.8 22.6 1,858.1
Earnings before
interest, tax, 318.8 208.7 52.8 555.4
depreciation
and amortisation
Operating profit
after tax, before 123.8 69.6 77.9 197.6
abnormals
Abnormal items
net of tax(1) -- -- -- 22.6
Net profit(2) 123.8 69.6 77.9 220.2
Dividend - cents
per share 10 7 42.9 20
(1) Represents a development allowance tax credit for the Boyne
Island smelter.
(2) On an equity accounting basis, Comalco's net profit for the June
1998 half year was $123.8 million.
Sales revenue
The 23% increase in sales revenue was mainly attributable to
higher volumes of aluminium from the new line 3 reduction line at the
Boyne Island smelter.
The devaluation of the Australian dollar against the US dollar
increased sales revenue in the first half of 1998. This benefit was
partly offset by lower US dollar aluminium prices and reduced product
premiums in Asian markets.
Dividend
Directors declared an unfranked half year dividend of 10 cents
per share (1997 half year dividend of 7 cents per share, franked to
the extent of 1.8 cents at the tax rate of 36%). Comalco's dividend is
unfranked, due to tax losses carried forward from 1996 and the benefit
of tax deductions against the substantial capital programs undertaken
during the past few years. It is unlikely that dividends will be
franked until the year 2000. The half year dividend will be paid on
October 1, 1998 to shareholders registered at 5:00 p.m. (or 10:00 p.m.
in respect of holdings on the CHESS Subregister) on September 17,
1998.
New Zealand shareholders will be paid their dividend on October
1, 1998 in New Zealand currency at the Bank of New Zealand telegraphic
transfer buying rate for Australian currency on September 17, 1998.
FUNDING
Cash flow
Net operating cash flow more than doubled to $391 million (1997
first half year $145 million). This was as a result of the improvement
in underlying earnings and the impact of a favorable movement in
working capital. This change in working capital reflects a combination
of the favorable movement of $74 million between December 31, 1997 and
June 30, 1998, combined with the $70 million unfavorable movement
reported in the first half of 1997.
Capital expenditure
Total capital expenditure for the first half of 1998 was $82
million (1997 first half year $192 million). Expenditure on new
projects was $52 million, mainly relating to the Weipa upgrade
program. The balance of capital spending was for maintaining and
improving existing operations.
Debt
Net debt (including short term funding) at June 30, 1998 was
$1,293 million, a reduction of $125 million from the level at December
31, 1997. Debt repayments of $202 million were partially offset by
upward revaluation of the US dollar denominated debt, in Australian
dollar terms, due to the weaker Australian dollar. Net debt as a
percentage of total capital (net debt plus shareholders' equity) was
43.3% at June 30, 1998, down from 47.0% at December 31, 1997.
PRICES AND INTERNATIONAL INDUSTRY CONDITIONS
First half 1998
The global aluminium supply/demand balance moved into surplus
during the first half of 1998. While demand from Western Europe and
the United States remained strong, the impact of the economic downturn
in Asia reduced primary aluminium consumption in that region by 15%
against the same period last year.
Notwithstanding the move into surplus, London Metal Exchange
(LME) aluminium stocks fell substantially over the first half of 1998
to 535,000 tonnes at June 30, 1998, down from 625,000 tonnes at
December 31, 1997. Since that time, LME stocks have continued to
decline, standing at 458,000 tonnes on August 20, 1998.
Despite this reduction in reported aluminium stocks, the cash LME
price fell from US$1,535 per tonne at December 31, 1997 to US$1,285
per tonne at June 30, 1998. On August 20, 1998, the cash price was
US$1,321 per tonne (US59.9 cents/lb).
The LME cash price averaged US$1,413 per tonne (US64.1 cents/lb)
for the first half of the year compared with US$1,589 per tonne
(US72.1 cents/lb) for the same period last year. The average for the
1997 full year was US$1,599 per tonne (US72.5 cents/lb).
The average US$:A$ exchange rate was US64.6 cents for the first
six months of 1998 compared with US77.4 cents for the same period in
1997 (1997 full year average US74.5 cents).
A one US cent change in the average aluminium price results in a
change to profit after tax of about A$15 million per year. A one cent
change in the Australian dollar versus the US dollar results in a
change in profit after tax of about A$12 million per year. These
sensitivities are based on a one cent movement from exchange rates and
LME prices prevailing in the first half of 1998.
Outlook
The Asian economic situation has worsened over the last six
months. South Korea, Indonesia, Thailand, Malaysia and now Japan are
in recession with associated flow on implications for aluminium demand
and price. To date China, Taiwan and Australia have been less
affected.
Japan holds the key to recovery in the region, due to the size of
its economy and intra regional trade. The impact of Asian financial
sector reforms and the proposed Japanese fiscal stimulus package are
unlikely to be felt until 1999. Whilst the short term outlook is
uncertain, the longer term prospects for the Asian region remain
strong. The outlook for Western Europe and the United States aluminium
demand continues to remain strong.
REVIEW OF OPERATIONS
Environment, Health and Safety
Comalco recognises the importance of responsible greenhouse
management and has invested significantly in the past few years to
address greenhouse emissions at its operations. Substantial reductions
in greenhouse emissions per tonne of metal produced have been
achieved.
Overall safety performance in the first half of 1998 has shown
modest improvement over last year. Comalco recorded a solid safety
performance during its major construction programs and will continue
to focus strong attention on ensuring high standards of safety.
Mining & Refining
Bauxite sales were 6% higher than in the same period in 1997, due
to higher shipments to the Eurallumina refinery in Italy. Bauxite
mining at Weipa switched from the Andoom area to the Weipa area in the
second quarter of this year. Construction work on the Weipa mine
upgrade was about 65% complete at June 30, 1998.
Alumina entitlements rose 138,000 tonnes to 757,000 tonnes due to
the increased ownership in the Eurallumina refinery and slightly
higher production by Queensland Alumina Limited.
Smelting
Operating performance improved at all three Comalco managed
smelters with increased production and lower cash conversion costs.
Comalco's aluminium entitlement from the three smelters was 320,000
tonnes, an increase of 25% from the corresponding period in 1997.
The Bell Bay and Tiwai Point smelters operated at full capacity.
At the Boyne Island smelter, 70 cells were taken out of circuit in
line 3 due to problems experienced with anodes. At August 20, 1998, 19
cells remained off line. Restart of these cells is progressing
steadily so as not to compromise improvements made to the operating
cells (245 cells). Production from lines 1 and 2 was not affected by
these difficulties.
Gladstone Power Station
The Gladstone Power Station (GPS) generation levels rose
substantially following the commissioning of the Boyne Island smelter
line 3 reduction line. GPS performed well at these increased operating
rates.
Discussions continued with the Queensland Government concerning
modification of GPS contracts as a result of electricity market
changes in Queensland.
Research & Technical Support
Research and development expenditure was $7.3 million. There is
now an increased emphasis on process improvement and product marketing
support. This work is integral to Comalco's performance improvement
programs and is beginning to show results.
Comalco Alumina Project
Comalco continued to study the feasibility of a greenfield
refinery based on Weipa bauxite at the two short-listed sites of
Gladstone in Queensland, Australia and Bintulu in Sarawak, Malaysia.
The keys to moving the project ahead are a competitive energy
supply package and appropriate fiscal incentives. Commercial
negotiations on major inputs and with the Australian and Malaysian
Federal and State governments are progressing.
Potential plant sites have been selected in both countries and
assessments of environmental and social impact are in progress.
N. B. All $ are Australian, unless otherwise stated.
Notes to Editors:
Rio Tinto currently has a 68.14% interest in Comalco Limited.
It announced on July 10, 1998 that since June 24, 1998 it had
increased its shareholding in Comalco Limited from 67.04% to 68.14%.
COMALCO FINANCIAL AND OPERATING STATISTICS
Half year Half year Year
1998 1997 1997
MINING & REFINING $ million $ million $ million
---------------------------------------------------------------------
Total sales 432.3 329.3 766.7
Total assets 594.7 504.2 588.9
Capital expenditure 59.8 17.4 54.2
Depreciation and amortisation 21.7 20.4 37.1
Bauxite tonnes tonnes tonnes
---------------------------------------------------------------------
Weipa
Beneficiated bauxite production 4,127,803 4,559,674 9,679,016
Metal grade bauxite shipments 4,858,187 4,583,495 9,001,793
Calcined bauxite production 55,461 65,811 135,857
Boke
Metal grade bauxite shipments
(Comalco's share) 216,431 172,123 508,908
Alumina (Comalco's alumina
entitlements) tonnes tonnes tonnes
---------------------------------------------------------------------
Queensland Alumina (30.3%) 501,552 497,255 992,753
Eurallumina (56.2%)(1) 255,200 121,898 246,187
-----------------------------------
Total 756,752 619,153 1,238,940
-----------------------------------
(1) Comalco's ownership increased from 26.9% to 56.2% effective
December 30, 1997.
Half year Half year Year
1998 1997 1997
SMELTING $ million $ million $ million
---------------------------------------------------------------------
Total sales 751.7 593.7 1,312.2
Total assets 2,234.8 2,049.4 2,220.8
Capital expenditure 15.2 176.4 250.2
Depreciation and amortisation 55.9 41.5 101.1
Primary aluminium (Comalco's
entitlements) tonnes tonnes tonnes
---------------------------------------------------------------------
Bell Bay, Tasmania 69,096 66,931 137,867
Tiwai Point, New Zealand (79.36%) 124,080 119,913 246,273
Boyne Island, Queensland
- lines 1 & 2 (50%) 64,436 64,258 129,188
- line 3 (59.25%) 62,507 3,635 51,858
-----------------------------------
Total 320,119 254,737 565,186
-----------------------------------
Half year Half year Year
1998 1997 1997
GLADSTONE POWER STATION $ million $ million $ million
---------------------------------------------------------------------
Total sales 60.3 59.0 117.6
Total assets 361.7 375.1 362.3
Capital expenditure 1.9 3.2 4.8
Depreciation and amortisation 7.6 7.6 15.1
Total sales include both external and internal sales at market price. Intercompany sales are eliminated in the financial statements. Prior period total asset figures have been restated to exclude inter-group receivable balances. Total assets comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise : non-group receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed and prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. , inventories, property, plant and equipment, expenditure carried forward and non-group investments. The exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of inter-group receivable balances will remove large fluctuations in reported total asset figures due to the timing of inter-group sales. CONTACT: Rio Tinto Rio Tinto may refer to:
Peter Darling Darling, river, 1,702 mi (2,739 km) long, rising in the Eastern Highlands, NE New South Wales and SE Queensland, Australia, and flowing SW across New South Wales into the Murray River at Wentworth. It is the longest river in Australia. , Media Relations 011-44-171-753-2355 or Gavin Gavin is a common given name in Ireland, England, Scotland, and Wales. It is the late medieval form of the name Gawain, which in turn is believed to have originated from the Welsh name Gwalchgwn, meaning "white hawk. Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic & Company Jason Kendy 212/373-0200 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion