Harrisons plans to pull out of Australia: Timber and chemicals sale could raise pounds 60m

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The Independent Online
HARRISONS & Crosfield, the food and building materials conglomerate, is to withdraw from almost all its Australian interests. It plans to sell or preferably float its chemicals and timber operations there within the next six months.

George Paul, chief executive, said the move would allow Harrisons to focus on its larger core activities elsewhere in the world. He added that the company lacked the resources to develop all its businesses.

'Our Australian businesses have done well over the years and are recovering strongly from recession,' he said. 'Flotation would provide them with excellent opportunities to develop independently.'

Charles Pick, an analyst at Panmure Gordon, the stockbroker, said that selling or floating the businesses could raise up to pounds 60m, making a sizeable dent in Harrison's debts of about pounds 250m. He added that the only surprise about the proposed deal was that it had come ahead of a rumoured flotation of Harrisons' Indonesian plantations.

The company's Australasian operations made profits last year of pounds 3.1m and have net assets of pounds 25.5m. The chemicals business, which trades as Harcros Chemicals, operates three plants in Australia and New Zealand, producing speciality chemicals.

The timber side, which employs 300 people, runs from 15 sites in New South Wales and Victoria. Harrisons' Linatex business, which makes equipment for the mining and aggregates industry, is the only operation being retained.

Profits from the Australasian companies represented only 4 per cent of last year's pounds 85m. In the six months to June, Harrisons increased profits by 19 per cent to pounds 48.4m, mainly because of a continuing cost-cutting programme. Full-year profits of pounds 108m are forecast.

Cuts included a reduction in staff in the building materials division from 5,300 to 3,700 in the three years since 1990. After the acquisition of BOCM, the animal feed company, by the food and agriculture division, 13 out of 33 mills were closed.

Harrisons shares closed yesterday 2p lower at 183p, yielding 6.1 per cent - a premium of more than 50 per cent to the market average. They have risen more than 60 per cent since sterling's devaluation last September.