American demand lubricates Burmah balance sheet
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Your support makes all the difference.A 50 PER CENT increase in profits from Castrol oil in the US helped Burmah-Castrol to a 16 per cent rise in pre-tax profits to pounds 103.8m in the first half of the year.
Jonathan Fry, chief executive, attributed the US increase partly to the first profits from Syntec, its synthetic motor oil that has been making losses since it was launched, as well as to strong sales to the industrial and commercial markets. But he warned that, although the second half was also likely to be strongly ahead, the increase was unlikely to be as dramatic as in the first half.
The US performance was the main contributor to a 24 per cent increase in operating profits from the lubricating division to pounds 86.6m, on volumes 7 per cent higher. Burmah estimates that the lubricants market rose about 1 per cent.
In Europe, by contrast, the lubricants market was more difficult, with volumes only slightly higher and margins under pressure.
Sales for the group as a whole rose 5.7 per cent to pounds 1.4bn while earnings per share were 25.6p, up from 23.4p.
The interim dividend is 10p a share compared with 16.5p but that is because it wants to change the balance between the interim and final payments. Last year, the total payment was 27.5p.
Burmah intends to pay some of its final dividend as a foreign income dividend, taking advantage of a scheme introduced in last year's Budget to save advance corporation tax.
Lawrence Urquhart, chairman, said that it was likely about a third of the total payment would be a foreign income dividend, reflecting the proportion of its overseas income from areas with higher tax rates than 33 per cent. He added the amount would be increased to compensate for the fact that there was no tax credit on a foreign income dividend.
The comments on dividends confused the City, however, and the shares fell 14p to 891p.
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