Media continuing to pay little attention to Aussie companies

Friday 31st August 2001

By Peter V O'Brien

The small amount of publicity given to the results and general activities of large Australian companies with Stock Exchange listings in New Zealand is one of the investment and media worlds' little mysteries.

Most of those companies maintain listings here because they have many New Zealand-based shareholders, whether in direct holdings or indirectly through participation in managed funds.

Last week's result from AMP commanded a reasonable amount of space here, probably due to media awareness of the number of New Zealanders who received shares when the insurance group demutualised.

Some other Australian companies did not receive similar treatment, perhaps because the awareness of AMP's New Zealand connection did not extend to them.

BHP Billiton was an example, as were Rio Tinto, Santos and News Corporation (Independent Newspaper's biggest shareholder).

Some space will be given to the major Australian banks as results arrive in November, but they will relate more to their ownership of New Zealand banks than recognition of the New Zealand-based shareholders.

The treatment of BHP Billiton's report in one New Zealand newspaper was extraordinary.

It comprised one paragraph, stating the bald profit figure, but had the grace to describe the recently merged combination of Australia's BHP and the UK's Billiton as the world's biggest diversified miner.

While results from such companies are posted on the internet and are available from news wire services, not all company shareholders have access to those information sources, strange as that may seen to the electronoholics.

Reports from major Australian companies have a value beyond providing shareholders with immediate information about the year's profit.

Their comments about current and likely future trading conditions and the local and international economic outlook are relevant to the interests of New Zealand investors, given our relationship to what happens in Australia.

Business and economic activity across the Tasman has an impact on New Zealand companies in relation to their business with Australia and often, but to a lesser extent, to their New Zealand market.

Rio Tinto's and BHP Billiton's position in the mining and mineral processing industries make their comments on such matters relevant to many industrial sectors and consequently to equity markets.

Rio Tinto chairman Sir Robert Wilson said the company saw little to encourage optimism about metals demand in the US during the rest of this year and, probably, the first half of 2002.

Sir Robert said neither Europe nor Japan looked like an "engine for recovery" and 2001 could be the first year since the early 1990s when global consumption of key non-ferrous metals would decline, "albeit by not very much."

The mining industry's low investment levels in new capacity as it entered the downturn, combined with low stocks and supply difficulties, particularly in aluminium, had served to mitigate the adverse consequences.

Sir Robert said the markets and presumably the prices for most metal and minerals, still seemed likely to remain subdued over the next 12 months.

Rio Tinto's net earnings for the six months ended June 30 were $A841 million, which was 24% higher than the $A677 million reported for the first half of the previous year.

Sir Robert said it was difficult to feel pessimistic about the future, having just achieved record half-year earnings, but the economic outlook was still deteriorating and Rio Tinto expected a testing time ahead.

BHP Billiton is more diversified than Rio Tinto in its range of minerals, including substantial activity in oil and gas.

The recent merger of the Australian-based and UK-based companies complicated the preliminary announcement for the year ended June 30, as did various write-offs and adjustments, resulting in the report to the Stock Exchange being 57 pages. Combined "attributable" profit before exceptional items of the component companies was $US2.19 billion an increase of $US446 million, or 26%, over the 2000 financial year.

While there were detailed comments about the latest year, BHP Billiton's views on the outlook were more relevant in the context of this discussion.

The company said a worldwide recovery was unlikely until the US economy began to improve, the European market reversed its recent slowdown and there was a resolution of the "persistent recessionary environment' in Japan."

"While a global slowdown will impact on our financial results, our robust, low-cost operations and the diversified nature of our businesses will buffer changes in individual products and markets and provide resilience to our earnings and cash flows."

News Corp operates in the industries that are as far away from mining as one could get, but the group's worldwide interests in entertainment and information gain, have come under pressure, from changes in economic conditions.

The preliminary report for the year ended June was light on forward looking comments, but implied last year was tough when it said: "This year has been one of competitive gains, necessary patience and improvements across all our businesses that position us well for greater earnings growth with the resumption of more favourable advertising and economic conditions."

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