Day: March 1, 2019

Bradken posts $100m profit as foundries fire up

BRADKEN Limited, chaired by New South Wales Infrastructure head Nick Greiner, has ridden the resources boom to post a $100 million profit from its cast steel products in the mining, energy and rail freight industries.
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The result exceeded guidance given in April when the company announced an earnings downgrade due to one-off costs. The shares rose 11.2 per cent, closing at $5.74.

The company said its profit after tax was up 15 per cent after minorities, which consisted of write-downs in goodwill of some UK assets. Statutory net profit was up 49 per cent.

Managing director Brian Hodges said Bradken’s order book was at record levels, its foundries ”are pushed to full capacity” and it had added capacity at foundries in Australia, Canada, Malaysia and the US.

”Bradken margins are strong and will remain very defensible,” he said. Accounts showed its overall gross profit margin was 29.8 per cent, with mining consumables, engineered products and industrial posting margins in the low 30s. Rail’s margin was 13.6 per cent.

But the company would minimise its capital expenditure in 2012-13 ”until the outlook becomes clearer”, Mr Hodges said.

Revenue from the mining products division was up 22 per cent at $648 million, boosted by acquisitions. Rail freight sales were up 56 per cent to $330.2 million. The US-based engineered products division was up 20 per cent, to $347 million. Earnings before interest, tax, depreciation and amortisation were $220.4 million.

Mr Hodges said he expected the past year’s softness in the energy sector to ease in the fourth quarter.

”There is quite a lot of expansion in land-based oil, and expansion in gas fracking and low-cost energy, which seems to be having such a positive impact on the US economy,” he said, and Bradken would get a spinoff.

Moelis Research noted the global uncertainty with coal, which represents 9 per cent of Bradken’s sales, but thought a GFC-type slowdown was unlikely. Bradken will pay its fully franked final dividend of 21.5¢ on September 4.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Xstrata ramps up austerity to defer $1bn spending

Coal comfort.SWISS miner Xstrata has swung into austerity mode in the face of falling commodity prices, targeting cost savings of $US970 million and deferring $US1 billion worth of spending this year.
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Xstrata overnight reported a 31 per cent drop in interim earnings before interest, tax, depreciation and amortisation to $US4 billion, compared with the previous corresponding half-year, due to a severe drop in commodity prices in the first half of 2012, blamed on renewed turmoil in the eurozone and a slowing growth rate in China.

Attributable profit fell 23 per cent to $US2.2 billion, or US75¢ per share, before exceptional items which reduced earnings by $US253 million. Impairments included: $US514 million against its investment in Lonmin, a $US162 million loss on the sale of a hydroelectric project in Chile to a joint venture with Origin Energy; $US111 million from closure of the Brunswick zinc mine, and $US21 million in merger costs. These were offset by a $US579 million deferred tax credit tied to July commencement of the Mineral Resource Rent Tax in Australia. The board declared an interim dividend of US14¢ per share, up 8 per cent on a year ago.

Xstrata is in the throes of a friendly scrip merger with major shareholder Glencore International and yesterday’s profit drop could see those investors hoping for a higher price. Shareholders are due to vote on the merger on September 7.

Chief executive Mick Davis said if the merger was voted down ”the inherent capacity of Xstrata to generate value as a stand-alone company remains very powerful indeed”.

Mr Davis decried the ”lack of conviction syndrome” which had spooked commodities markets and said the current slowdown was cyclical, not the end of the secular change in demand. Addressing concerns that shale gas would undermine thermal coal demand, Mr Davis said shale production would be largely confined to the US until next decade and coal would remain the cheapest power source for developing economies.

Xstrata shares rose 2 per cent or 18.5 pence to 901.5p in early London trade. Glencore shares also rose 2 per cent or 7.15p to 336p.

Xstrata said the $US970 million in savings would more than offset expected cost inflation of about $US580 million in 2012.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Transurban risks backlash over CEO pay

TRANSURBAN risks infuriating shareholders again after it was revealed that its former chief executive, Chris Lynch, received a total salary package of $7.36 million for his last year in the job.
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The release of his pay details came as Australia’s largest listed toll road operator took a cautious approach to dividend guidance for this financial year due, partly, to volatile economic conditions.

Executive pay at Transurban was a bone of contention among shareholders for most of Mr Lynch’s four years in the top job. The pay report shows his total package of $7.36 million included $1.76 million in short-term cash bonuses and $3.08 million in share-based benefits.

Although Transurban appeased investors last year by changing the way it rewards management, Mr Lynch’s pay risks raising the ire of investors at Transurban’s annual meeting later this year. His total pay for 2011-12 was 9 per cent higher than the $6.75 million he received the previous year. It amounted to about 8 per cent of Transurban’s total employee expenses.

Transurban yesterday reported a 9 per cent rise in proportionate pre-tax earnings to $784 million for the year to June, which was better than analysts had expected. But the company, which operates CityLink in Melbourne and the Hills M2 and Westlink M7 in Sydney, disappointed investors with its distribution guidance of 31¢ per security for 2012-13.

Shares in Transurban closed down 9¢ at $5.94 following its cautious outlook statement.

Transurban’s new chief executive, Scott Charlton, said the board had decided to take a more cautious approach because it was a ”transition year” for the company and due to volatile economic conditions.

Although not all of the distribution forecast for this financial year will be paid out of free cash flow, Mr Charlton said it should not be taken as a sign that Transurban would return to the days when it adopted the so-called Macquarie model of using borrowings to fund dividends.

Transurban has experienced slight weakness in traffic volumes on some of its motorways, including CityLink, which comprises more than half of its toll revenue.

Mr Charlton, who took over from Mr Lynch last month, said it was difficult to ascertain whether the weakness was due to economic conditions or construction works on some of the roadways.

Transurban also warned that the completion of an upgrade to the M2 could be delayed because of wet weather. It had been due to be completed by the middle of next year.

The company posted a 50 per cent fall in net profit to $58.6 million, which was largely the result of a $138 million write-down in the value of its investment in the Pocahontas roadway in the US.

Transurban spent $US611 million on the Virginia toll road in 2006. The company said it was considering the future of the roadway, which could include selling its interest in the asset. The company will pay a final distribution of 15¢ per security on August 14, which takes the payout for last financial year to 29.5¢. It compares with a total payout of 27¢ in 2010-11.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Company tax cuts report due

More tax trouble is looming.TENSIONS between miners and Canberra are threatening to flare up again in the coming weeks, as pressure to fund corporate tax cuts puts the industry’s tax breaks under the spotlight.
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After company tax cuts were scrapped in this year’s budget due to political opposition, an expert panel appointed by the Treasurer is due to report as soon as this week on how the government could fund company tax cuts in the future.

The Prime Minister, Julia Gillard, has signalled that any company tax reduction would have to be ”revenue neutral”, so the panel is expected to float cutting a wide range of corporate tax perks.

And despite miners’ hostility to any tax rises, it is understood the Business Tax Working Group sees cutting hundreds of millions in tax breaks for mining exploration as one way of freeing up revenue.

Accelerated depreciation rules, which benefit miners and airlines in particular, are also likely to come under scrutiny, as the working group asks big business what it is prepared to give up in exchange for lower taxes.

A source close to the working group said the depreciation rules for mining were especially wide-ranging, and cutting the instant write-offs for explorers would be included as one option in its upcoming report.

”If you’re a mining company and you buy mining rights you get an immediate deduction for that,” the source said. ”You’re getting a right to mine, it lasts a long time, should you write that off over a period?”

Instant asset write-offs for miners are worth about $300 million a year, Treasury says. Accelerated depreciation of equipment such as aircraft, trucks and tractors cost more than $1 billion a year in forgone revenue.

Any removal of mining tax breaks would likely face a bitter reception in the industry, which is being hit by falling commodity prices and weak overseas demand.

When an April report from the working group floated cuts to exploration write-offs in the lead-up to the budget, the mining industry took out anti-tax advertisements in national newspapers.

The Business Tax Working Group, led by Board of Taxation chairman Chris Jordan, has until the end of this year to report on whether company tax cuts are justified and, if so, how to pay for them.

But after Ms Gillard said in June that she had ”no doubt” company taxes should be lower than their current rate of 30 per cent, the working group is set to argue the case this month for corporate tax cuts.

Echoing the Henry review of taxation, the group’s report is expected to say Australia’s relatively high company tax rate of 30 per cent is due to be reduced because it could affect the nation’s ability to attract capital.

The challenge, however, is how to pay for lower company taxes.

This story Administrator ready to work first appeared on Nanjing Night Net.

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Farewell Robert Hughes – critic, raconteur, fisherman, shooter,historian, memoirist

Robert Hughes at the 1997 Sydney launch of his book The Fatal Shore. Robert Hughes with former PM Gough Whitlam at the launch of The Fatal Shore in 1987.
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IN THE American century the art critic Robert Hughes was the first Australian to turn from England and take Manhattan.

Thousands of Australians, including his mates in the Sydney Push, Germaine Greer and Clive James, were carving careers in swinging London’s fag-end years. But Hughes was the only one to complete an Atlantic crossing.

He had erupted as a precocious art critic from the land of the convict taint on the pre-Murdoch Sunday Times when the man from Time happened to flip through a copy of Hughes’ 1969 flop Heaven and Hell in Western Art.

The magazine was America’s window to the world and the men and women who worked on it belonged to a sort of east coast Brahman class. But when the senior editor phoned to offer the Time art critic job, Hughes recalled he was so stoned he thought it was the CIA calling.

”In a measured and dignified way, I told this spook exactly what I thought of the American imperialism whose tool he was, of American policy in Vietnam, of American perfidy. It was quite a little performance. I then, secure in the knowledge of a good day’s work compressed into a couple of minutes, hung up in his ear,” Hughes wrote in a 2006 memoir Things I Didn’t Know.

Nevertheless, he moved to Manhattan in 1970 and wrote for Time for the rest of the century.

Along the way he evolved into a leading intellectual, who not only defended art against postmodernism but also educated and informed millions around the world in immensely popular TV series and books such as The Shock of the New in 1991.

His 1987 hymn to Australia, The Fatal Shore, is his best known work. The book heroically reminded Australians the convict taint that had caused collective amnesia in previous generations could be a badge of honour, and few were surprised when the expat emerged as a leading voice of the republican movement.

Hughes died in New York yesterday from a long illness. He was 74. He had been in bad health since a 1999 car accident in Western Australia left him in a coma. A protracted court case in which he eventually pleaded guilty to dangerous driving causing grievous bodily harm and was fined $2500 further eroded his health.

Prime Minister Julia Gillard said yesterday Australia had lost not only a frank critic and writer, but an esteemed historian who made significant contributions to tracing and telling Australia’s colonial history.

”Few people … can have been so completely cosmopolitan, and completely Australian as Robert Hughes. His was, in every sense, a great Australian voice.”

Another Australian occupant of the world stage, satirist Barry Humphries, said Hughes was an old friend and a great and fearless critic. ”He gave a wonderful and witty speech at my last birthday party in New York and I’m deeply saddened that alcoholism, or whatever name it sometimes goes by, should have claimed yet another distinguished victim,” he said.

His niece Lucy Turnbull said Hughes combined irreverence and larrikin charm and humour with an incredible gift for language: ”He was a real man’s man … he was a very keen fisherman and shooter as well as being an erudite and very learned communicator and so knowledgeable in the arts.”

Hughes came from an establishment, but Catholic, family. His grandfather was Sydney’s first lord mayor, his father was a highly decorated First World War pilot who trained Australian flyers in the Second World War and died when Hughes was 12. His brother Tom, was John Gorton’s attorney-general but, dumped by Billy McMahon, retired to a glittering career at the Sydney bar. He also had a brother Geoffrey and sister Constance.

He was educated at Sydney’s Riverview and, if the Jesuits did not keep their man, they inculcated a grasp of religious iconography that impressed the man from Time. Hughes failed to finish an architecture degree at the University of Sydney, drew cartoons and wrote art criticism for the Packer family’s current affairs magazine The Observer and then set sail for London in 1964.

In 1967 he married Danne Emerson. The marriage produced a son. Academic Catherine Lumby recalls the pain Hughes went through when they divorced. ”Life was pretty freewheeling for some in those days but Bob wasn’t one of them,” Lumby said. ”He … was clearly hurt by what was occurring.”

His son, Danton, committed suicide in in 2002.

Hughes married twice more. The second marriage, to American artist Doris Downes, was in 2001. She had flown to be with him after the 1999 Broome crash.

Barry Humphries knew Hughes in expat London and as young bohemians around Sydney in the mid 1950s. The satirist once joked he modelled Les Patterson on him, partly because in 50 years in New York he never lost his Australian accent.

Nor did Hughes lose his sense of place: He remained an Australian citizen.

Correction: The original version of this story incorrectly said Hughes’s sister Connie was a nun.

This story Administrator ready to work first appeared on Nanjing Night Net.

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