COMMERCIAL Profits in line, survey shows

Press, Volume CXIV, Issue 33514, 20 April 1974, Page 13

COMMERCIAL Profits in line, survey shows

C<cw Zealand Press Association' AUCKLAND. The profits of 10 of New Zealand’s largest companies in the last four years no more than kept in step with the increased investment in assets and the increases in wage payments, according to figures produced by the retiring president of the Auckland Chamber of Commerce (Mr D. H. Wvlie).

The 10 companies surveyed were Alex Harvey Industries, Ltd. Farmers’ Trad- : ing Company, Ltd. Fletcher Holdings, Ltd, NZ Forest ■ Products. Ltd, NZ News, Ltd. UEB Industries, Ltd,: I Wilson and Horton, Ltd,; Winstone, Lid, Motor Traders, Ltd, and Dominion Bre- ■ weries, Ltd. Some of their I wage and sales figures were i supplied on a confidential 'basis. Between 1909 and 1973 {the 10 companies increased i their assets 99 per cent to ,5715.9 m and the funds invested by the shareholders increased’ 87 per cent to is374m, Mr Wylie said at the annual meeting. In the same period net profits increased 97 per cent, to S4om, sales rose 87 per cent, wage and salary payments went up 92 per cent to $ 145.4 m or more than three times and a half the amount of profit. However, sums paid out in dividends increased only 73 per cent to $20.3m. To help finance expansion, the companies increased the amounts of profits retained in the business 131 per cent to sl9.Bni. [{ If companies had to absorb all the frequent cost increases, one of the greatest [and cheapest sources of ! capital formation would be reduced to a damaging ex- ' tent.

It seemed incongruous that the Government encouraged capital formation by \ taxation incentives while at the same time killing the cheapest form of capital formation, retained profits, Mr | Wylie said. The return on assets employed declined marginally from 5:65 per cent to 5.59 [per cent but the average learning rate on shareholders’ funds, edged up from 10.2 per cent to 10.7 per cent. Mr Wylie said that there were no substantial revaluations of assets during the four years, but the real lvalues of these assets would have risen in this period of .rapid inflation. I Because the value of assets were not adjusted, the real rates of return had probably fallen, Mr Wylie [said.