K.P.G. Expects To Improve Profit

Press, Volume CVI, Issue 31226, 25 November 1966, Page 17

K.P.G. Expects To Improve Profit

Steps were being taken which were expected to place the group in a better profitearning position, the chairman of KaiapoiPetone Group Textiles, Ltd., (Mr J. D. Gardiner) told shareholders at the annual meeting yesterday.

In a comprehensive survey of the problems which beset the company in its latest year, Mr Gardiner said that measures were also being taken to improve liquidity. As already reported, K.P.G.’s profit last year fell by £44,522 to £47,922 and dividend was cut from 8 to 4 perd cent. ■ After noting that the main reasons for the decline were given in the annual report, the chairman gave shareholders the background to the upset.

“As you will be aware, the sale of our major products fall into two categories—indent sales and stock sales. Indent sales, which account for the greater part of our turn-over, are made against orders placed by our customers some four to six months prior to the season in which delivery is made, while stock sales result from further orders placed with us for immediate delivery during the season itself,” said the chairman.

“For a number of years, stock sales of our major lines, particularly during the winter season have been limited by availability of the goods, as our production has in the main been regulated to cover the execution of indent business. “Because of this, our board

decided to provide for increased stock sales, which was expected to give benefits both in production and marketing. This policy was initiated during the 1965 financial year, and continued during the past year. “However, as a result of economic conditions and credit restraints, both retail and public buying of many types of woollen merchandise was much more restricted during the past financial year, and particularly during the winter season.

“This made it difficult to achieve an adequate level of stock sales. Furthermore, intense competition in the market led to a reduction in margins on some of the business which was done. “As a result of these factors our stock sales of most winter woollen goods, with the exception of hand knitting wools, fell well short of expectations, and did not keep in step with our production. “This affected our gross profit ,and increased stock