A. B. Consol improved efficiency

Press, Volume CXII, Issue 32975, 22 July 1972, Page 19

A. B. Consol improved efficiency

The accounts of A. B. Consolidated Holdings, Ltd, food manufacturer, showed the beneficial effect of the company’s efforts to improve operating efficiency.

In the year to March 31 the cost of selling, distribution, and administration was reduced from 82.6 per cent of gross profit from manufacturing to 80 per cent. The chairman (Mr N. Burnett) says in the annual report that after May, 1971 production from the completed factory had to be adjusted to the new techniques required and in addition the recession in the economy posed additional problems. However, during the latter part of the year the company began to feel the benefit of its forward planning. Mr Burnett says that attention has now turned to marketing and co-ordination of marketing operations is being undertaken, but the economies arising from moves so far where not reflected in the results for the year under review.

Duplicated warehousing and distribution facilities were eliminated in Dunedin, Hamilton and Wellington and manpower was reduced.

Decisions were also made on product rationalisation. More than 200 competing lines in biscuits and confectionery are being progessively withdrawn from the market and greater emphasis is being placed on selling high volume products. Biscuit sales in the first half of the year were below those of the previous corresponding period. However, sales recovered in the second half of the year and by the end of the year they were ahead of those for 1971. The

recovery was maintained in the first two months of the current year, Mr Burnett says. Chocolate and confectionery sales showed substantial growth with new Rowntree Mackintosh lines introduced.

Snack food sales increased substantially and directors are confident of the future of this rapidly growing industry. As previously reported the group net profit for the year rose by $58,316 or 34.2 per cent to $228,708. The profit was struck after providing $94,792 more for depreciation of $322,347 and $22,289 more for income tax of $83,474. The payroll tax was $25,017 higher at $61,097. Special depreciation of $108,325 was not written off in the accounts, but it was taken into account in providing for taxation. It had the effect of reducing the provision by $48,746. An ordinary final dividend of 1.5 c a share will be paid out of capital reserves on August 11 making an unchanged 3c a share (6 per cent) for the year, but the total pay-out is tax-free.

The earning rate on unchanged capital of $3,625,000 rose from 4.1 per cent to 5.7 per cent after allowing for the preference dividend and that on average shareholders’ funds rose from 2.2 per cent to 2.9 per cent. Working capital increased by $274,566 to $1,755,376; the current ratio improved from 1.5 to 1 to 1.7 to 1. Shareholders’ funds were $9432 higher at $7,179,168.