Burmah Castrol lifts results 17%

STRONG growth in lubricants and cost-cutting in chemicals helped Burmah Castrol to report a better than expected first-half result yesterday.

Taxable profits improved by more than 17 per cent to pounds 72.2m for the period to 30 June on virtually unchanged sales of pounds 1.15bn.

Helped by a lower tax charge, earnings per share surged ahead 26 per cent to 22.5p. The interim payout has been improved 3 per cent to 8.75p a share.

The results reflect a robust performance from most of Burmah's operations and interest costs down from pounds 24.3m to pounds 20m.

The lubricants division, which includes the Castrol brand, improved trading profits from pounds 58.7m to pounds 65.1m thanks to a 13 per cent rise in sales volumes.

The company benefited from strong demand for its motor oils in the US, where volumes rose 18 per cent due to an improving market share. Burmah said that despite the recession, private motorists were reluctant to buy cheaper lubricants as they were running older cars for which they preferred premium oils.

Later this week it launches a new all-synthetic motor oil in the US with a multi-million-pound marketing campaign.

Although demand for industrial lubricants remained stagnant gross margins were held at last year's levels.

Trading profits from speciality chemicals were broadly unchanged at pounds 17.2m although results from the division were patchy. Metallurgical chemicals were again hit by depressed conditions.

Christine Baker, oil analyst at Nomura research, predicts net profits of pounds 85m for the full year. The shares rose 23p to 568p.