Natural Resources Help Offset Real Estate and Financial Woes

Natural resources help offset real estate and financial woes

The corporate engine that the Edper Bronfman group of companies is counting on to pull it to financial safety appears to be rolling along reasonably well.

But it's still not moving quickly enough to overcome the recent difficulties in the group's troubled real estate, consumer products and financial services arms, according to results reported yesterday by several senior companies in the Toronto-based Edper organization.

Rising natural resource prices and lower production costs enabled Brascan Ltd. to report a six-month profit of $15.6-million or 4 cents a share, compared with $21.4-million or 2 cents a year earlier.

Investment analysts said the results are in line with expectations, although one noted that he had anticipated slightly higher profit, given the substantially higher contribution coming out of Noranda Inc. and Brascan's other natural resource holdings.

Noranda - which earned $49-million, up from $33-million - contributed $36.9-million to Brascan's $134.9-million in six-month operating income, and $32.2-million out of $66.8-million in the second quarter.

The company attributed the improvement in natural resource earnings to lower interest and exchange rates, as well as lower costs and higher coal related income.

Yet despite the fact that Brascan's fortunes are so strongly linked to the natural resource sector, the improvement on this side was not large enough to offset lower earnings from both John Labatt Ltd. and Trilon Financial Corp., Brascan said in a statement.

Labatt, which Brascan is guiding through a sweeping restructuring, is based in London, Ont.; all the other Edper companies have headquarters in Toronto.

Before allocating expenses, financial services - bogged down primarily by problems at Trilon's Royal Trustco Ltd. subsidiary - contributed $14.2- million in the first half, down from $28.9-million, and $3.6- million in the most recent quarter, compared with $13.5-million.

After asset sales and writedowns, Brascan's consumer and industrial products chipped in $13.7-million in the first half and $1-million in the second quarter, compared with $21.2-million and $4.5-million, respectively. Brascan's share profit rose as a result of lower preferred share dividend payments.

Hees International Bancorp Inc., which controls Brascan in partnership with Edper Enterprises Ltd., said it earned a profit of $87.3-million or 90 cents a share, down from $102.9-million or $1.01. The company attributed this to lower merchant banking profit and lower dividend payments from its real estate subsidiaries.

Pagurian Corp. Ltd., which controls Hees in partnership with Edper, reported that income fell 16 per cent to $21.6-million or 24 cents a share, as a result of reduced profit at Edper and Hees - which are also Pagurian's two major investments.