Review Of Week’s Stock’ Exchange Transactions

Press, Volume CIV, Issue 30782, 21 June 1965, Page 17

Review Of Week’s Stock’ Exchange Transactions

Drifting prices last week caused the sharpest slide the share market in New Zealand has seen for a long time and a steadying on Friday did not do much to brighten the picture.

Investors might have done a little more pondering about the New Zealand Budget brought down the week before, decided more positively what was in it for them and reacted accordingly.

However, the Budget is only one factor to consider in looking at last week’s falling prices on a mai \et that is now more sensitive than ever before to happenings overseas.

Most badly hit in local trading were Australian shares and on the week Mount Lyell with a marginal gain, was the only issue to advance in the overseas list. Falls in the New Zealand list were well ahead of rises, but again the trading pattern was patchy. Reversal Fails by Australian shares reflected last week's reversal on the market in Australia. Contributing to the setback there are several factors.

Among these are the possibilities of higher taxation in the coming Federal Budget, drought conditions in the Eastern States and a sharp drop m this season’s wool cheque. Australia, rather more than New Zealand, has been affected by curbs on the capital inflow from the United States and Britain. These days, it seems, unsettled conditions across the Tasman also upset the New Zealand share market. Post-Budget reflection on noremittance car imports last week seemed favourable to car and vehicle distributors.

Baillie Motors rose Id to Us 6d, Manthel - Holdings 3d to 28s 3d. Porter Motors 6d to 30s and Seabrook Fowlds Is to 25s 9d. Mixed Reaction There seemed to be mixed reaction to proposed cuts in the construction of bigger buildings, but there were some declines in shares that could be affected. Slowing in the tempo of television set sales is causing television stocks to be marked back.

Autocrat settled back to a new low level of 16s. while Bel! Radio lost more ground to sell 6d down at 35s 6d and Pye sold at 20s 3d —only 3d above its lowest point for the year. Breweries lifted at the close on Friday on news that beer prices were to rise. The announcement came too late for a very marked effect to be shown as some advances were recoveries from recent falls. Dominion closed Id up at 18s 4d and Ballins 4d up at 12s lOd. New Zealand Breweries was down 3d on the week to 14s. Turn-over on the Christchurch Stock Exchange last week was 92.261 against 74 320 on the four days of trading the week before. This gave an average daily turn-over of 18,452 compared with 18,850. Peak Profit Donaghy’s Rope and Twine announced a peak profit of £96.519 in its latest year but only. after providing less for taxation at £94,000. Last year’s profit was £91.003 or £2997 less and was after providing £llO,OOO for taxation.

No reason is given in the annual report for the lower taxation provision. Gross profit after deducting manufacturing expenses was also a record at £330,439 but higher administration, management and financial expenses reduced pre-tax profit to £190.519 against £201,003 last year. Working capital increased by £46.853 to £493.192 and the ratio of current assets to cur-

rent liabilities improved from 3.499:1 to 4.039:1. Shareholders’ funds were £51,487 hi; aer at £901.462 but average earning rate was steady at 10.9 per cent. Transfer of £3O 000 has lifted general reserve to £130.000. Some interesting facts arise from miscellaneous information published with the accounts.

A table shows that raw materials absorbed 12s 5d of every £1 in sales, compared with 12s Id last year, Ils 9d in 1963 and Ils lOd in 1962 Wages and salaries have fallen to 2s lOd in the last two years from 3s 2d in 1963 and 1962 but the average remuner-

ation paid to each employee lias risen to about £1025, from £995 in. 1964 and £B4O in 1962.

These figures show, too that gross profit has risen from £257,579 in 1962 to £330,439 this year.

Truth Earnings Lower provision for depreciation and taxation gave relief to net earnings of Truth (N.Z.) after gross revenue fell £ll,BBB in the latest year. Profit rose £9516 to £42.621 but is still below the profit of £50.036 for 1963 and the peak of £55.520 set in 1961. In 1964 depreciation expenses jumped from £24,817 to £63.182 because of heavy expenditure on new plant and equipment, but in the latest vear allowance falls £21,572 to £41,610. Taxation is £B2BB lower at £35,712.

Truth made a one-for-four bonus issue in the latest year

and this qualifies for the final dividend of 7.3 per cent. With the interim dividend of 4 per cent total dividend is 101 per cent on capital after the bonus issue and requires £2139 more at £24,952. An insatiable demand for new cars and an increase in supply has ensured prosperity in the motor industry. Last week, two General Motors distributors. Manthel Holdings and Baillie Motors, announced higher earnings. Manthel, listed last year after a placement of 180,000 10s shares, increased its pretax, unaudited profit by 54 per cent to £lBB,OOO in the latest year.

A final dividend of 51 per cent makes a total of 11 per cent for the year which was the fate predicted when the issue was made.

Baillie Motors, based at Hastings, announced a net profit of more than £25 000 in the first half-year against a total profit of £36.539 for the year before. Sales for the six months were 29 per cent higher than for the same period last year and directors believe prospects are good for maintaining the improved earnings for the test of the year. Cement Demand

Demand for cement last year was high but ironically, was probably the reason for a drop in profit of 11.6 per cent to £309,819 by Wilsons Portland Cement.

In the 1963-64 year Wilsons took surplus cement from other companies, boosting turn-over to a record 323.665 tons.

Last year, however, there was no surplus and Wilsons' turn-over dropped by 13,458 tons to 310,207 tons. For the second successive year, plant operated continuously. Once again, only minimum time was allowed for essential repairs, deferring maintenance expenses. Because of this, directors have raised the depreciation reserve by £51.684 to £250,000

and the general reserve bv £50,000 to £65.000.

Prospects for the future are bright, says the chairman of directors (Mr H. M. Rogerson).

An expansion plan, scheduled for completion next year at a cost of £2.5m. will raise capacity to 500,000 tons of clinker a year. This scheme is being financed from internal resources and is reflected in the net increase in fixed assets, by £846.081 to £3.3m

Dividend, including the bonus, is a steady 9 per cent and requires a steady £144.000. It is covered more than twice by profit. Shareholders’ funds are £202.324 higher at £2.7m and earning rate falls to 11.2 per cent from 13.8 per cent. Wilson Malt Wilson Mali’s annua' renort released last week, disclosed a profit drop of £2830 or 34 oer cent to £5374 and a setback to its plans for a whisky distillery at Willowbank, Dunedin.

Three applicants who were to come to New Zealand to advise the company. had changed their minds, said the -hairman of directors (Mr J. L. T. Braithwaite). But, he said, the board is communicating with other possible applicants and a Scottish firm of distillery architects is preparing plans. Wilson Malt, producer of malt extract, brewer’s malt and manufacturing chemist, was granted a licence to distil whiskv last October. Dividend has been reduced from 7 per cent to 6 per cent and the payment of £2250 is more than twice covered by profit.