Dom. Breweries sees profit improvement

Press, Volume CXII, Issue 32967, 13 July 1972, Page 18

Dom. Breweries sees profit improvement

Neto Zealand Press Association)

Dominion Brewer! the expected increase i measures would material chairman (Sir Henry Ke

AUCKLAND, July 12. ies, Ltd, is confident that, given reasonable stability, in consumer spending arising from the Budget illy enhance profitability in the current year, the Jlfiher) says in the annual report.

Profitability should return to normal levels, assuming there was only a moderate increase in costs and that the company secured at least its proportionate share of increased sales, he says. As announced, the group net profit for the year to March 31 edged up by $11,014 or 0.4 per cent, to $2,817,765. The earning rate on shareholders’ funds was down from 10.2 per cent to 8.4 per cent and on capital from 23.5 per cent to 21.7 per cent. After the decline in profit, by 13 per cent, in the first half of the year, the result was a noteworthy achievement. The industry carried increased costs for nine months, but profitability was further eroded by the strike, Sir Henry Kelliher says. The accounts showed that fixed assets at book value increased by $7,020,059, to $43,882,134, in spite of heavy depreciation. Term liabilities increased by $5.5m. The completion of capital expenditure contracts as at March 31 would involve a further expenditure of $5,441,299. Sir Henry Kelliher says that capital expenditure of this magnitude on the construction and acquisition of new hotels and taverns, involving disproportionately heavy initial depreciation and establishment costs, must take reasonable time to come to full profit. As an example he mentioned the Rutherford tourist hotel, Nelson, which would have a final cost of about $3.5m.

New hotels were opened during the year at New Ply-

mouth, Kaikohe, Hastings, and Christchurch, and new taverns at Hamilton and New Plymouth. New hotels and taverns were being constructed at Nelson, Mairangi Bay, Waharoa. Haast and Westport. New hotels and taverns were being planned for Tauranga, Whangaparaoa, Christchurch. Hastings, Whangarei (two), Otaua, and Rotorua. Excellent progress had been made in establishing connections with carriers and agents in New Zealand and overseas. This should enable the company to secure a much higher level of occupancy and profitability in the residential hotels throughout the country. For example, six months before the opening of the Rutherford Hotel in Nelson already 86 conference days, representing more than 11,000 “bed-nights,” had been sold, Sir Henry Kelliher says. Application for increased gross profit margins for the wine and spirits branches would be made in the near future.

The profit was struck after providing $384,499 more for depreciation at $1,955,304 (including depreciation in excess of allowable rates), $175,183 payroll tax and $443,354 less at $2,388,709 for income tax.

The steady 12J per cent dividend took $1,625,086. Shareholders’ funds were $1,478,543 higher at $34,398,513, including capital

increased by $78,969 to $13,000,689 in take-overs. Sir Henry Kelliher says that capital reserves available for tax-free distribution “when circumstances allow” exceeded sl3m.