Fall in Motor Specialties profit “temporary”

Press, Volume CXII, Issue 33061, 31 October 1972, Page 21

Fall in Motor Specialties profit “temporary”

(New Zealand Press Association)

AUCKLAND, October 30.

The directors of Motor Specialties Industries, Ltd, regard the 18.5 per cent fall in profit in the year to June 30 as temporary and are confident of a return to normal profit in the current year. Sales in the first three months were ahead of those in the same period last year, with exports up more than 30 per cent, the annual report says.

With the broadened base of operations, the group is able to service wider fields of industry and it is not so susceptible to sudden changes in any one sector, the chairman (Mr W. D. Barclay), and the managing director (Mr T. A. R. Gibbs), say in the report.

Sales and gross profits in the year were at record levels but much higher costs and the price freeze depressed the net earnings.

Manufacturing facilities were enhanced by new plant, while the distribution chain was strengthened with new warehouses throughout the country. This completed most of the major capital projects. The liberalising of car imports reduced major overhauls and servicing of older vehicles, and engine reconditionings were deferred. The

drop in sales of automotive components was a major influence of trading.

The directors welcomed the increased imports of new vehicles, as servicing and component sales had a direct relationship to the number registered. Sales of Scania trucks by the new subsidiary, Swedish Motors, were lower than expected but this situation has changed greatly and sales of trucks were above forecast and those of heavy-duty engines buoyant. Meteor Manufacturing and Engineering, Ltd, felt the full impact of depressed conditions, but Dominion Oil Refining Company, Ltd, traded profitably and was well based for more expansion in new and allied products. Glacier Bearings, Ltd (a joint venture with Repco, N.Z., Ltd, maintained its pro-

fitability. Current sales were much improved. Paykel-Honeywell, Ltd, the joint venture for environmental controls and industrial instrumentation, traded most satisfactorily and gained large air-conditioning contracts.

As announced, the group net profit fell $136,953 to $602,913. This was after providing $106,304 more for depreciation of $463,916, $24,361 more for payroll tax of $91,953 and $256,697 less for income tax of $491,248. Minorities, a new item, were $69,039.

The earning rate on shareholders’ funds fell from 10 per cent to 7.3 per cent, and on capital from 22.9 per cent to 16.9 per cent.

The steady 13 per cent ordinary dividend took $455,273 and the preference dividend $lO,OOO. Shareholders’ funds were $1,019,286 higher at $8,790,826, including preference capital of $200,000 and ordinary capital lifted by $313,699 to $3,502,255 in the Dominion Oil acquisition.

Term liabilities were $1,072,700 higher at $4,508,800.