Eastern threat and promise at BP
15 Jan 2000
Not quite up to record levels, but still turning in a strong performance, BP turned its thoughts to the east as it presented its annual results. With economic activity in Indonesia at a standstill and a question mark over financial reforms in Korea, BP Chemicals executives admitted that a 'sharp effect' on the chemicals industry may be unavoidable.
The BP Group posted a replacement cost operating profit of £2.8 billion, up 13 per cent on the previous year, with turnover down 3 per cent at £43.5 billion. In the chemicals division, operating profits edged up 1.5 per cent on turnover down 9.8 per cent at £3.1 billion. Chief executive Bryan Sanderson noted that it was his division's 'third best result'.
Sanderson was optimistic about future performance, especially with the leverage gained by the acquisition of Styrenix Kunststoffe (see PE Feb, p5). Uncertainty in Asia represents both a threat and an opportunity, he noted. The recent turmoil means that three years' growth has 'more or less vanished' from the region; Korean unions may be unwilling to implement vital industrial restructuring; Indonesia has 'almost stopped' due to lack of liquidity. But the revaluing of assets means that 'if you're brave enough', there are opportunities to buy plants.
