BHP to spin off stake in NZ steel firm

WELLINGTON - Australian company Broken Hill Proprietary's 50.1 per cent stake in New Zealand steel products company Steel & Tube Holdings will be transferred to a new entity.

BHP will spin off its long products division and rename it OneSteel, the Steel & Tube chief executive, Nick Calavrias, said yesterday.

OneSteel would list on the Australian Stock Exchange on October 23.

BHP's shares in Steel & Tube would be transferred to OneSteel, but the transaction would not change the way the company ran in New Zealand, Mr Calavrias said.

BHP said OneSteel would be spun out of BHP, with OneSteel paying BHP $A932 million ($NZ1.3 billion) in cash to cover its debts.

Steel & Tube yesterday reported a threefold increase in its net profit for the 13 months to June 30 and said the current year had begun well, although there were worries about the construction industry slowdown.

The Lower Hutt-based company posted an after-tax profit of $14.26 million for the 13 months to June, up 324 per cent on the $3.36 million for the previous 12 months.

Mr Calavrias said the company had "quite a reasonable July." August saw a strong start which tapered off in the second half.

He said the company was concerned about the future, given the current uncertain economic climate.

"Obviously the downturn in residential and commercial construction is quite a significant driver in the New Zealand economy. But if we put that aside all other parts of the economy seem to be going quite strong."

The 1999-2000 operating surplus before tax rose to $26.96 million, up $7.73 million on last year. The company has changed its balance date from May 31 to June 30.

Steel & Tube said sales rose during the year by $98 million (32 per cent) to $403.1 million after deducting discontinued activities.

"The improved profit result was achieved through a combination of increased business activity and actions taken to improve core business performance in both New Zealand and Canada," it said.

Annualised earnings per share increased from 3.8c to 15c.

The company had already paid a year-end dividend of 7c per share, taking the total distribution for the year to 13c a share.

BHP attempted to sell its stake in Steel & Tube last year, but abandoned plans earlier this year.

Yesterday, it said the June-year result included an unusual loss of $570,000, following a multimillion-dollar claim against Transfield Power Systems for engineering work completed in 1998. The claim was settled below its carrying cost.

Sales in the company's steel distribution division were up 5 per cent, and volume increased 11 per cent.

Steel & Tube's reinforcing activities had a difficult period, with fewer opportunities in medium to large projects. The roofing products division benefited from the synergies of merging the recently acquired BHP Steel Building Products NZ business and from the strong residential and light commercial sectors increasing their sales 11 per cent.

Steel & Tube shares closed 3c higher at 150c.

- NZPA