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BL Back In The Black

18 April 1984

BL Back In The Black
Executive Editor Kenneth Fleet

There are, thank goodness, no great horrors or surprises in the 1983 results which BL produced yesterday. The company achieved its target of breaking even at the trading level last year. In fact it produced a small operating profit of £4.1m, compared with the 1982 loss of £125.8m, thanks largely to the success of the Metro and the Maestro in this country and the triumphant march of Jaguar through the car salerooms of the United .'States.

It is the first year that BL has traded in the black since 1978, and it looks certain at last that it will not now have to come back to the Government for any more money in the foreseeable future. This is entirely welcome. There is still plenty of red ink below the trading line in the accounts.

The pre-tax loss after net interest costs of £71m emerges as £67.1m, and the net loss is £151m, roughly half the 1982 figure of £292m. This includes a provision of £73m for rationalization costs at the troubled Land Rover/Leyland division, whose losses last year shot up from £42m to £66m, largely as a result of well-chronicled problems in the trucks division. BL has already announced 1,000 job losses at Leyland Trucks this year, and the Cabinet is still agonising over the future of the Bathgate truck and engine plant in Scotland, which BL's latest corporate plan recommended closing.

About £40m has been prudently included in the £73m extraordinary item to cover the likely redundacy and closure costs: how much will be needed will depend on whether Mr George Younger the Scottish Secretary, succeeds in his efforts to save the Bathgate operation.

For the first time BL has provided a breakdown of the performance of the different components in its cars division, showing that Jaguar and Unipart, the two most immediate candidates on the privatization list, are both performing well. Jaguar exceptionally so. Its operating profit rose from £15m to £55m, while Unipart, the components division, increased profits from £14m to £17m.

Austin-Rover, thanks to the Metro and the Maestro, made an operating profit of £2m, against its £10m loss in 1982. But Land-Rover, once a privatization candidate, made a loss after a sharp cut in exports.

Jaguar's performance is at the top end of most analysts estimates, and means that the flotation, now tipped for July, could easily raise the best part of £300m. Though it was helped by the weaker pound, Jaguar's sales performance last year was a tribute to the revival that has been wrought in its performance by Mr John Egan, its chairman. Sales were up by 7,000 to 29,100 cars, just over half of them in the United States.

Productivity has also improved sharply. Much still depends on the new XJ40 car which will be launched around the end of this year, but the Government will clearly not want to hang about when it comes to bringing Jaguar to market. There has been endless internal wrangling in Whitehall over how the company should be privatized. But it now looks as if 100 per cent of the shares will go on sale, BL having lost its fight to keep a minority stake. A large chunk of shares will be reserved for management and workers.

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