Half Year Result to 31 December 2000

Pasminco Limited recorded a loss after tax of $37.3 million for the six months ended 31 December 2000. The result was after providing a restructuring provision of $11 million ($17 million before tax).

Net profit after tax in the corresponding six month period in 1999 was $0.3 million.

Compared with the previous corresponding period, operating profit increased by $32 million, from $56 million in 1999 to $88 million in 2000.

The $27 million contribution from the group’s Century mine was the major factor in the increased earnings period on period. This is a most encouraging maiden contribution, considering that throughput was curtailed in the 2nd quarter to improve zinc recoveries and product quality. In addition the $US/$A exchange rate contributed $58 million to earnings.

This was offset by the negative impact of lower production and sales volumes from other operations, and marginally higher costs in the second quarter, which together reduced operating profit by $47 million.

In addition the net impact of treatment charges and metal premiums reduced earnings by a further $2 million. Realised US dollar metal prices overall were $17 million lower period on period.

As anticipated, financing costs increased by $40 million to $71 million as capitalisation of Century borrowing costs ceased during the previous half.

Realised losses on foreign exchange options impacted the result adversely by $42 million. The benefit of the weaker Australian dollar during the period was eroded by below plan output and the group’s currency option program.

Commenting on the operating result, David Stewart, Managing Director and Chief Executive said, “Despite improving profit from operations by $32 million, overall performance was unacceptable and well below potential. This was compounded by higher financing costs of $71 million ($31 million in 1999) and losses of $42 million on foreign exchange options.”

“The first half loss underlines the need to lift performance, lower our cost structure and critically review our asset base. These issues are being addressed as matters of urgency through a comprehensive Business Improvement Program targeting an annualised improvement of $100 million by the end of 2001. We have taken the first steps in this process, leading to the decision to create a provision of $11 million, after tax, to cover the costs of some 200 employee redundancies over the next 12 months.”

“We are confident that as the benefits of the Business Improvement Program become visible and the increased contribution from the Century production ramp up is delivered, we will return to profit in the second half. We are clearly focused on delivering an improved return from the business and restoring shareholder value,” said Mr Stewart.

Market Outlook

Although the underlying supply/demand balance for zinc and lead remain favourable, concerns over the extent of the slow down in the US economy and the impact this may have on metal demand, have recently depressed metal prices. Despite the level of zinc metal exports from China, London Metal Exchange (LME) zinc stocks remain at low levels.

Dividend

The Directors have not declared an interim dividend.



Detail of the Management Discussion


click here to download the report for the half year ended 31st December
2000 (MS Excel 5.0 format)

click here to download Appendix 4B (MS Excel 5.0 format)


Click here to download the 2001 Half Year Results Presentation (348 Kb)

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For further information contact:

Trevor Shard
Group Manager - Investor Relations
++ 61 (3) 9288 9186 or 0419 584 515

Peter Griffin
Group Manager - Public Affairs
++ 61 (3) 9288 0463 or 0419 314 265

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