Account gamble'
British Oxygen
John Bull
The practice in North America is for companies to produce quarterly figures but in this country, apart from the oil majors, few others report more than twice a year. One of these, however, is British Oxygen, the £150m capitalised manufacturer of industrial gases. And from the statement in March it was clear the group had got away to a cracking start in 1973. Sales were up 17 per cent to £69.8m and pre-tax profits 29 per cent to £5.78m.
These encouraging figures are basically a reflection of the much healthier economic background against which British Oxygen operates. To take the UK first, the group is now getting the benefit of its huge modernisation programme; the Widnes oxygen/nitrogen plant, for instance, will be excellently placed as demand from the BSC for gases increases. The UK and Europe, in fact, made a 34 per cent trading advance in the first three months. And another side here that has benefited from a revival in demand is the metals division. This made a loss of around Elm in 1972 but now is back into the black. Outside these areas overseas trading made a 14 per cent trading profit improvement with recovery seen by the South African and Australian companies.
After making such dramatic progress in the first quarter British Oxygen has lost none of its impetus. But even given that the group's earnings growth might overall be more modest than the 33 per cent increase, so far it does seem fair enough to go for at least a 15 per cent improvement. On this basis the shares are selling at only 13 times earnings and yield 4.1 per cent.
I feel the market will begin to wake up to the potential on publication of the interim figures at the end of the month. Also, it is interesting to note that British Oxygen has begun to diversify its interests and, in the case of Arunta (Scotland) an offshore service company, into a very emotionally exciting area. This new venture will concentrate on developing a twenty acre site at Peterhead to accommodate warehousing distribution and quayside facilities and will be fully operational by mid-August this year. Another development going on at British Oxygen is with laser cutting machinery.
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