A total of 450 jobs will go this year out of the workforce of 20,000 and a further 1,000 in the following three years. The redundancies this year include 100 in the UK, the bulk of which are at Burmah's construction chemicals division in Tamworth and have already been announced.
Tim Stevenson, Burmah's chief executive, said the additional 1,000 job cuts would be spread right across the group. The programme would result in exceptional charges of pounds 35m this year, pounds 30m next years and pounds 85m in the following two years. But Burmah is forecasting savings of pounds 30m this year rising to pounds 60m a year by 2002.
The job losses came as Burmah Castrol reported better-than-expected first- half profits and described the outlook for the second half as "favourable". Pre-tax, pre-exceptional profits in the six months to the end of June rose by 5 per cent to pounds 125.5m with its Castrol car and motorcycle lubricants division performing particularly strongly, increasing profits by 24 per cent to pounds 85m.
Mr Stevenson described reports that it was considering a deal to take over BP Amoco's lubricant business, which includes the Duckham's brand, as "wild card speculation".
He said that at a time of industry consolidation Burmah had to be on the look out for opportunities. But part of the reason for Castrol's success was that it was independent of an upstream oil major. Mr Stevenson also doubted whether it would be sensible for the company to manage and promote more than one lubricants brand at the same time.
Following last May's pounds 280m return of capital to shareholders, gearing will rise to 85 per cent and interest cover will fall to 10-times earnings.
Mr Stevenson said he would be comfortable to see this fall further to between six and seven-times earnings, giving Burmah the scope for bolt- on acquisitions worth around pounds 100m a year.Reuse content