Bottom Line: Castrol smoothes Burmah's path
Tuesday 12 April 1994
Last year growth in profits at Castrol, the lubricants operation, underpinned a healthy improvement in group-wide results.
A combination of introducing new synthetic oils in North America and rapid growth from the emerging Asian economies helped operating profit from lubricants to advance by an impressive 22 per cent to pounds 155m. The stock market, however, chose to focus its attention on questions about short- term growth prospects.
Worries are that Burmah will be hard pressed to increase current year earnings per share. A second enhanced scrip dividend could mean that dilution will amount to about 5 per cent.
In addition, this year Burmah will have to do without pounds 7m worth of provisions released, which has inflated profits each year since 1989.
The market is also troubled by Burmah's chemicals division, and particularly the performance of the Foseco businesses bought in 1990 for pounds 260m. Operating profits from chemicals were held back by Foseco, but profits still increased by 8 per cent.
Sentiment towards Burmah yesterday took a further knock because a good chunk of last year's profits advance was due to favourable movements in exchange rates.
A gross yield of 4.2 per cent gives Burmah considerable income attractions. But, blissfully free of oil exploration and production, there is promise in underlying trading as well.
Castrol is a strong brand, is well marketed and has a growing global presence. Earnings may tread water this year but that makes Burmah's p/e ratio of 15, falling to 12 in 1995, all the more attractive. Buy.
Malaysia Airlines plane crash exposes alarming flaw in airline security: over one billion flights made last year without stolen-passport check
International Women's Day 2014: The shocking statistics that show why it is still so important
Teacher shows sex tape featuring herself to pupils during class by mistake
Swarm of killer bees sting woman 1,000 times
Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Australian man Rod Sommerville reacts to bite from deadly snake by reaching for cold beer
- 3 Teacher shows sex tape featuring herself to pupils during class by mistake
- 4 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
- 5 Swarm of killer bees sting woman 1,000 times
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...