Lonrho profits slump to pounds 80m

LONRHO, the controversial international trading conglomerate, announced its widely expected slump in pre-tax profits for its last financial year. Taxable profits tumbled from pounds 205m to pounds 80m for the year ending 30 September in what Lonrho's chief executive, Roland 'Tiny' Rowland described as 'the most difficult' in the company's history.

Lonrho announced its figures a day after it reported that Dieter Bock, the German businessman who has recently acquired an 18.8 per cent shareholding in Lonrho, has become joint chief executive with Mr Rowland.

Mr Rowland has told shareholders that in the future 'while taking up the many excellent opportunities which we have in Europe, Lonrho intends to continue the group's presence as the largest British investor in Africa, where we have been successful and happy. Our operations in Africa are well-managed and still expanding at some pace.'

In its last financial year Lonrho has been hit particularly hard on its mining side by adverse movements in platinum and gold prices. Profits from its mid-African interests slumped from pounds 96m to pounds 69m.

However, executives at Lonrho said that group borrowings were subsantially reduced to around pounds 710m net of cash after being above pounds 1bn a year ago.

Paul Spicer, Lonrho's deputy chairman, said yesterday that it was the company's intention to reduce borrowings by about pounds 200m to pounds 300m.

Although analysts in the City expect Lonrho's next large disposal to be the Observer newspaper, which is estimated to be making losses of at least pounds 16m a year, Mr Spicer described the speculation as 'balderdash.'

He said: 'No one has talked to me about the sale of the Observer. It is all speculation. The Observer is a small matter against the background of an international organisation like Lonrho. It is a very popular newspaper.'

Lonrho's share price rose 7p to 82p because pre-tax profits were pounds 1m higher than forecast at the time of Lonrho's cash-raising operation last December, which brought a guaranteed pounds 85m into the company.

The dividend for the year is 4p a share compared with 13p a year ago.