‘Satisfying’ profit by Autocrat

Press, Volume CXI, Issue 32636, 18 June 1971, Page 6

‘Satisfying’ profit by Autocrat

(Neu.' Zealand Press Association)

AUCKLAND, June 17.

The 3.2 per cent increase in the net profit of Autocrat Radio, Ltd, in the year to February 28 was insufficient to maintain the earning rate on average shareholders’ funds and the rate eased from 15.9 per cent to 15.4 per cent, but the chairman (Mr R. H. Walker) says that the result was satisfying, considering that the company experienced probably unparallelled cost increases.

He says that turnover increases are not only desirable but necessary to maintain profitability and to combat rising costs, but these increases usually contribute to a higher level of stock and trade debtors. With Government pressures on credit the financing of these extra sums has been something of a strain, and to improve liquidity stock levels are being progressively reduced.

Exports. were increased substantially to $200,000 during the year, but the substantial cost increases in New Zealand could, in the short term, make it difficult to maintain this level of exports. In the longer term, the company is involved in various projects which have not yet contributed to returns. These should at' least ensure a comparable level of exports, Mr Walker says. The prediction of a higher profit by the marine accessory subsidiary, Fisher and Blundell, was realised, and it is hoped that this trend will continue. Current sales are higher than in the previous corresponding period and prospects look good, Mr Walker says. The television rental division did not perform as well as expected, since competition for the restricted market has been more intense.

The marketing of Sanyo electronic calculators has been affected by falling world prices and constantly changing models. This division substantially increased its sales, but the trend towards leasing of equipment while providing a better profit spreads it over a longer term. The divisional restructuring of the company, referred to in last year’s annual report, permitted each division to benefit from group promotion and advertising. Promotion has already gone a long way towards the establishment Of the Sanyo brand of radios, appliances and calculators since the pre-viously-announced licensing agreement with the Japanese manufacturer, Mr walker says.

As announced, the group net profit rose $7421 to $242,815. It was struck after providing $26,725 more for depreciation at $149,211, and $6586 more for tax at $215,808.

The steady 20 per cent dividend takes an unchanged $126,000.

The earning rate on capital improved from 37.4 to 38.5 per cent.

Shareholders' funds are $72,019 higher at $1,608,948, including steady capital of $630,000.