4 December 1997: For the year to 30 September 1997, the industrial gases operation BOC Group reported profit before tax of US$ 716.8 million, marginally more than the previous year, and turnover of US…
4 December 1997: For the year to 30 September 1997, the industrial gases operation BOC Group reported profit before tax of US$ 716.8 million, marginally more than the previous year, and turnover of US$ 6.381 billion, down 1%. After eliminating currency translation effects, Group profit before tax was up 7% and turnover was up 6%. Earnings per share of 95.49 cents were up 9% on a constant currency basis and up 3% as reported. A dividend of 49.7 cents (+6.6%) is proposed for the year to 30 September 1998. The first interim dividend of 24.9 cent will be paid in early February 1998 to holders of ordinary shares on the register at 28 November 1997. A second interim dividend of 24.8 cent is planned for payment on 3 August 1998. Excluding currency translation effects, profit in the gases division totalled US$ 669.1 million, up 10%, and turnover US$ 4.556 billion, up 9%. Capital spending on BOC“s gases business increased 17% with US$ 1.169 billion being invested in new fixed assets. At constant exchange rates, the increase in capital spending in BOC Gases would have been 25%. Over ten major plants to satisfy long-term contracts were commissioned in the US while the Asia/Pacific region became the region of greatest capital investment in 1997, with BOC Gases spending US$ 496 million there. Next year will see increased expenditure in Europe as construction of large plants in Poland and the UK begins. Commenting on the results, BOC Group Chief Executive, Danny Rosenkranz said: “We have enjoyed a very productive and encouraging year in most aspects of our business. Our gases business performed well. We have maintained or increased our share of most key markets and won a significant number of major contracts, including a major scheme in Mexico.” In Europe alone, after eliminating currency translation effects, BOC Gases turnover increased 7% and operating profit increased by 8%. Conditions in the UK economy created few opportunities to increase sales and competition put pressure on prices. Sales volumes were essentially flat but a small increase in operating profit was achieved mainly by reducing overhead costs in the bulk and tonnage segment. According to BOC, the profit increase in 1997 would have been larger but for continuing costs associated with upgrading business systems to improve commercial efficiency. BOC“s business in Ireland developed strongly, in line with the economy and with investments by the electronics and pharmaceutical industries. Development of the BOC Gazy business in Poland continued despite disruption from severe floods. During 1997, new plants were successfully commissioned at Huta Czestochowa and POL Float Glass. In the United States, BOC Gases reported a successful year in 1997 with growth of sales and operating profit, as well as significant progress towards longer-term strategic objectives of increasing the proportion of income from on-site plants. Economic conditions in the US remained similar to the previous year with good economic growth and low inflation. This limited opportunities to increase selling prices and efforts to improve business efficiency and reduce costs were intensified. BOC Gases“ turnover in the US increased by 12% and operating profit by 4% in 1997. Most of this turnover increase was due to increased sales from new on-site plants, although there was also some growth in the market for liquefied gases. Operating profit increased mainly as a result of cost savings and productivity improvements. 1997 was described by BOC as a year of outstanding progress in Latin America with contracts for major nitrogen and hydrogen plants in Venezuela and Mexico respectively. For the African region, after eliminating currency translation effects, constant exchange rate growth of BOC“s turnover between 1996 and 1997 in the Africa region was 14% and operating profit growth was 13% on a similar basis. The underlying growth of gases turnover in 1997 in the Asia/Pacific region was 10% and operating profit growth was 13%. Turnover and operating profit increased in both Australia and New Zealand for 1997. This was in spite of generally slow growth in the Australian economy. The development of the minerals sector was more encouraging, said BOC. BOC Gases was successful in winning most of the important supply scheme contracts that were tendered in the mining and minerals sector. When the plants are commissioned, these contracts should increase BOC“s air separation capacity in Australia by around a third.