BHP STEEL SEES BENEFITS FROM INVESTMENT IN 1988
The major benefits of BHP Steel
International Group's big capital expenditure program should
begin to be seen in its 1988 financial year ending next May 31,
Broken Hill Pty Co Ltd <BRKN.S> officials said.
    A decline in BHP Steel's net profit to 200.02 mln dlrs in
the 1987 year ended May 31, 1987, from 253.87 mln the year
before, contributed to the drop in attributable group earnings
to 820.27 mln dlrs from 988.20 mln.
    "We look forward to a 1988 year of consolidation while
continuing our strong business development initiatives," BHP
Steel chief executive officer David Rice told reporters.
    Rice said BHP Steel's capital spending in 1987 totalled 701
mln dlrs, and that total expenditure would be about 1.4 billion
dlrs by the time the government's five-year Steel Industry Plan
expires at the end of calendar 1988.
    He said the investment program, aimed at making BHP Steel
both technically and commercially competitive on a world scale,
was now over its peak and would begin to scale down.
    Operational and commissioning problems flowing from the
investment program, combined with the highest levels of
industrial action since the steel plan started, had contributed
to the decline in 1987 earnings, he said.
    Rice said the industrial and production problems forced BHP
Steel to import 280,000 tonnes of steel in its 1987 financial
year to keep faith with customers.
    The new items of plant are now past their initial teething
problems and talks have intensified with the unions on the
industrial troubles, he said.
    Despite the profit drop in the 1987 year, BHP Steel
International group was one of the most profitable steel
producers in the world on an after-tax basis, he said.
    Its capacity utilisation was far higher, at 89 pct, than
the current western world average of 69 pct, he added.
 REUTER
