The figures, using the FRS3 reporting standard, were almost matched by earnings per share up 20 per cent to 24.8p. However Robert Wilson, chief executive, said the more appropriate comparison was of adjusted earnings, which exclude exceptional items and discontinued operations.
In 1991 the group had been hit by pounds 103m of provisions, mainly against losses at the politically troubled Bougainville copper mine in Papua New Guinea. Stripping these out, adjusted earnings last year were up only 1 per cent at pounds 348m.
Mr Wilson said the flat earnings result was a 'fairly reasonable reflection' of the company's performance during the year. A 2 per cent fall in metal prices reduced profits by pounds 21m, but this was balanced by a pounds 22m gain from increased production. A fourth mill line came on stream at Bingham Canyon, a US copper and gold mine, while gold mine expansion projects also got under way in South Africa, Indonesia and Australia.
With most of its revenues in dollars, the company gained through translation effects from the fall in sterling. The weaker Australian dollar also helped RTZ's affiliate, CRA. However, the currency shift pushed the year-end debt, mostly denominated in US dollars, up by 37 per cent. Gearing rose from 27 per cent to 34 per cent.
The recent acquisitions of the Nerco and Cordero coal-mining companies in the US have since increased gearing to 63 per cent. RTZ intends to reduce this by selling Nerco's oil and gas operations, although Sir Derek Birkin, chairman, would not be drawn on how much was likely to be raised.
Mr Wilson said RTZ had made the decision not to increase the dividend after seeing metal prices weakening in the first quarter of this year. This led the company to decide that there was unlikely to be widespread recovery from recession.
But Emil Morfett, an analyst with Smith New Court, said he was surprised. 'If they can afford to buy the coal assets, they can afford to give a token dividend increase,' he said, adding that RTZ's progressive dividend policy was one of the attractions of the stock.
By contrast Robert Davies, an analyst at Shearson Lehman Brothers, said: 'Anyone who knew Derek Birkin would know that he would not pay a dividend that was not adequately covered.' He said RTZ could not get away from being a cyclical stock, and agreed with Sir Derek, who said the company 'is highly geared for recovery. If in a year's time the US recovery is confirmed and Europe is looking up, we will really motor.' The shares fell 13p to 675p.
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