COMPANY PROFITS

Press, Volume LXXXV, Issue 25994, 23 December 1949, Page 11

COMPANY PROFITS

RISE IN AUSTRALIA MAINTAINED The post-war period in Australia has been marked by an unprecented expansion of business and industry, says the Sydney Stock Exchange “Official Gazette,’ ’ in respect alike of the extension of the activities of existing concerns and of the establishment of new industries. Shortages of essential materials and of labour, the cramping influence of heavy taxation, and frequent interruptions due to strikes and stoppages have prevented the community from enjoying the full benefits of this nation-wide development, in that production has not at any time been Drought near the maximum potential. Business buoyancy is still being maintained, and the actual volume of company profits is probably still on an upward trend. It will take some years yet to bring supplies of goods and services into line with the strong pent-up demand, and, unless the inflationary movement gets out of hand, or some unexpected set-back has to be faced, progress should continue. Some companies, formed in a time of acute shortage, without adequate resources or competent management, are now showing the strain of hard competition. Some have already succumbed, but on the whole the industrial and financial structure of the country has untouched possibilities of growth and stability. Figures published by the Commonwealth Bank in its “Statistical Record

support the conclusion that company profits on the whole retain their buoyancy. They show, for example that net profits of trading banks, which ut 1939 represented 4.2 per cent, of shareholders funds, and which were down to 3.6 per cent, in 1942, had recovered to 4.6 per cent, in 1948. Other financial companies, which earned 5.3 per cent, on shareholders’ funds in 1942, showed 7.5 per cent, in 1948. while a large group of other companies revealed earnings of 7.6 per cent.. 6.5 per cent., and 8.3 per cent, respectively.

Further Improvement As from 1948 to 1949. further improvement was shown. Net profit of three trading banks, the accounts of which have been published, moved up from £719,000, equivalent to 4.3 per cent, on shareholders’ funds, to £748,000, or 4.7 per cent, on funds. Of these profits, £642,000 was paid in dividends in 1948 and £674,000 in other financial concerns, Including insurance, hire purchase, trustee, pastoral finance, and general finance companies and bunding societies, 42 in all, shareholders’ funds of which were nearly a million higher at earnedaggregate net profits of £1,352,000 in 1949 as ■against £1,401,000 1* 1948? fill tficYehSe of 32.2 per cent. Dividends paid by these companies were £231,000 higher at £1,303,000. representing 6.3 per cent, on shareholders’ funds, compared with 5.5 per cent, in the previous year. Figures relating to 115 miscellaneous companies tell a similar story. As from 1948 to 1949. shareholders funds advanced from £85,754,000 to £94,709,000, net earnings from £6,656.000 in the aggregate to £7,960,000, an increase of 19.6 per cent., and dividends paid from £4,683,000 to £5,083,000. All the evidence, taken with an increasing measure of inflation, suggests

that investments spread over companies pliving a real part in economic development should readily maintain, and probably improve, their position.