COMMERCIAL Review Of Week’s Stock Exchange Transactions

Press, Volume CIV, Issue 30938, 20 December 1965, Page 21

COMMERCIAL Review Of Week’s Stock Exchange Transactions

Overshadowing all other company news last week was the announcement on Monday by Canterbury Frozen Meat of a £336.830 loss in the latest trading year. Later in the week Southland Frozen Meat reported its recommended final dividend giving shareholders the same return as before the one-for-two bonus, but directors said nothing about results for the year.

Crothalls made a preliminary announcement showing latest profit up 68 per cent, and Vibrapac and Charles Begg sounded notes of warning in their half-yearly reports.

Canterbury Frozen Meat lost ground sharply on news of the loss and on Tuesday sold down to 27s —a drop of 8s But on Wednesday Is 9d was recovered and as the week wore on C.F.M. regained more ground to close at 30s 3d. No Surprise The C.F.M. setback came as no real surprise to those carefully watching the frozen meat industry, but the size of the loss was a little staggering

But meat companies suffer the ebb and flow of trading fortunes as a regular part of their business.

Notwithstanding, C.F.M. is to pay a 5 per cent ordinary dividend, compared with the 6 per cent, plus 2J bonus last year.

Over-optimistic lamb schedules and upsets in the ewe mutton market can perhaps be blamed for the loss. Meat companies take a calculated risk with schedules for meat that may not be sold on the London market for two or three months. Usually the schedule more than justifies the risk taken and there is a run of profits. Once in every few years there is an upset and the meat companies suffer. New Market In recent years New Zealand has developed a valuable market for mutton in Japan. Because of this a large pert of New Zealand mutton production has been diverted to Japan. An unduly optimistic view of this market taken at the start of the last season has not been justified by subsequent realisations. There has also been a sharp drop in exports of mutton to Japan. This season a more cautious view is being taken and the schedules to farmers have been set at more modest rates. Doubtless the weakness in the mutton market was a major cause of the C.FJf. loss. But the loss should prove only a temporary setback and

there is no real cause for alarm. Tuesday's sharp decline was obviously too marked a reaction to the loss announcement. C.F.M. is usually the bellwether of major frozen meat companies, but it is not certain if it will be the trendsetter this time. Caution Again There was caution in halfyearly reports from both Vibrapac and Charles Begg last week. The week before, in his half-yearly report, the managing director of Fletcher Holdings (Mr J. C. Fletcher) warned that there could be a down-turn in trading conditions.

Vibrapac's chairman (Mr N. Vincent), in his report, said the group’s financial structure was much stronger than 12 months before. However, in 1966 the group faced a very substantial capital expenditure programme, he said. Vibrapac’s board was considering how this development would be accomplished and was mindful of the shareholders’ proprietary ratio in the company’s funds. Turnover of the group for the six months to September 30 was 15 per cent higher at £495,575 than for the same six months of last year. Directors of Charles Begg said in their half-yearly report that, as they had forecast, trading conditions had become extremely competitive. The credit squeeze and the “explosive” situation in the television field was likely to affect profits in the second half of the year. Lost Ground New Zealand share prices lost more ground last week with falls out-numbering rises 61 to 17, while 60 issues were steady. Overseas stocks closed the week roughly in balance with the firmer trend by leaders giving prices a lift in this section.

Easing by key New Zealand stocks contributed to the

weaker market, but trading covered a narrower range. . However, there were some worthwhile rises in the New Zealand list as well as some sharp falls. New Zealand Refining rose Is McLeod Brothers 9d, Northern Steam, A. S. Paterson ex dividend and Enzlon 7d each, and Mason Brothers, Tappenden and Wilkins and Davies 6d each. New Zealand Refrigerating was hard hit with falls of Is 9d each by the old shares and notes and Is 4d by the dividend deferred shares. Insurances Insurances were also weak. National lost 6d to 225, New Zealand 5d to 22s 2d and South British 7d to 30s 3d. Woollens and textiles slipped and among shares to be marked down were Alliance, Bonds, Lane Walker, Manawatu and Mosgiel. Television stocks sagged. Bell lost most with a Is 6d fall to 26s 6d, and Autocrat, Charles Begg and Pye also eased. Banks featured among overseas rises. A.N.Z. Bank added 9d more to 50s and both the Australian and New Zealand registers of the Bank of New South Wales closed up on the week before. Colonial Sugar rose Is 6d to 52s 9d, and among mining Broken Hill South and Mount Isa were firmer. More Palmer Further episodes in the unhappy affair of H. G. Palmer (Consolidated) were played last week, but these did nothing to make the position any happier. The group indicated that its losses may reach almost £lom —enough to swallow all of the shareholders’, ■ funds mostly held by the N.L.C. The company announced that in the year to June 30 group loss was £4,350,000, but directors said that provision for extra losses of £5.5m had been made.

In a separate statement, Mr C. H. R. Jackson, receiver for the group, said' he believed that the group’s assets should be preserved in the interests of ail creditors. This could only be done by continuing operations and the gradual rehabilitation of the business on sound and profit-

able lines, he said. Mr Jackson is acting for the debenture holders and obviously feels that it is in their best interests to keep the organisation going. A word of comfort to de-benture-holders came from the financial editor of the “Sydney Morning Herald." He said that, in theory at _ least, a total and final writefc off of more than £lom would E leave the capital investment J of debenture-holders intact. A But, he said, everything R would depend on what the R final loss score would be. | Mr Jackson has also had ■ talks with the Commonwealth | Department of Social Services, I probably about those debenE ture-holders who are entitled E to pensions now interest payR ments have stopped. I The other development was lin Brisbane where the I Queensland receiver for the I company (Mr J. G. A. Tucker) | held a press conference. | He made the point that E there was no legal liability E on M.L.C., owner of all the R ordinary shares in H. G. R Palmer, to guarantee the deR benture and unsecured note R capital. | Under the Companies Act a ■ statement of affairs of the a company must be in the | hands of the Receiver by De--5 cem ber 31. E This should give a far bet- * ter understanding of H. G. R Palmer’s over-all financial R position.