COMMERCIAL N.Z. Forest will need more funds
'New Zealand Press Association)
AUCKLAND
N.Z. Forest Products, Ltd, will need additional finance for planned projects, but, with the company’s standing in financial circles, no problems in raising the necessary funds are expected, the chairman (Sir Reginald Smythe) says in the annual report.
Debenture money' committed by New Zealand financial institutions has been received as planend and a further $4,749,400 is due for receipt this year and next. The British Export Credit Guarantee Department has also supported a sterling facility of £2.5m, made available by Lloyds Bank at 6 per cent for British-made plant for the third board machine at Whakatane and* the redesign of the No. I paper machine at Kinleith.
Re-financing in New- Zealand of 70 per cent, or $13.7m, of an overseas loan, j plus the repayment of other! sma«er sums borrowed abroad, produced a capital profit of $3,961,373, in the year to March 31. It has been transferred to the capital profits reserve, making it $5.9m.
Revaluations of land more than trebled the land revaluation reserve, to $21.4m. and this helped increase shareholders’ funds from $134.3m to $161.6m. The one-for-five bonus issue in September will transfer 59.7 m from the share premium reserve of $37.4m to ordinary capital, which was $48.2m on balance date. The accounts show’ that the $5.9m residue of the overseas bank loan, originally repayable on March 31, 1975, hut for which an extension has now been arranged, attracted interest, on a rollover basis, at an average of 13.16 per cent. But the local commercialbills facility — the main vehicle for refinancing the portion retired overseas —- bore interest at an average of only 7.64 per cent. Of the bills, $6.3m terminate on March 1 next vear and $4.4m on March‘l, 1977. Group exports rose 22.2 per cent to s3Bm. The recent agreement with Australian Paper Manufacturers, Ltd, assures N.Z.FP. of entry to Australia for substantial tonnage of linerboard and kraft, with provision for a share in the growth of Australian demand. “While the supply of paper| to Australia has been satis-1 factorv and in line with the! agreement, the supply of pulp : has fallen well below the! needs of Australian con-1 sumers. i
“The company’s contract commitments have been met, but much larger quantities could have been sold if these had been available. Every effort is being made to meet the unfilled demand.” the report says.
The contract to sell a sub-; stantial quantity of kraft pulp| and linerboard to China, ne-l gotiated during the year, will' be spread over three vears.' until mid-1977. In addition to major markets in Australia and China, the most favourable market is the Philippines, where increased sales of pulp and some sales of linerboard and
corrugating medium are expected. The Japanese market, which is more readily supplied from North America, is of diminishing significance. The log trade w'ith Japan will end completely on March 31, after which full forest growth will be used for further domestic processing.
The results for this financial year wjll depend on several factors, not the least of them the ability to raise production in the new plants at Kinleith to rated capacity, the managing director (Mr A. W. Mackney) says. Some production problems have occurred with new' equipment. But they are being overcome and it" is expected that substantially increased output will be secured.
“This should lead to a greater availability of pulp and in particualr, more bleached pulp should be produced. “The substantial cost increases for raw materials, w’ages and salaries, and overheads. continues to present a major challenge to management.
“Economies are being effected wherever possible but. while inflation continues, some price rises are inevitable.
“A stable industrial climate is also of paramount importance so that maximum production can be achieved and output increased,” the report says.
As reported, the group net profit rose 45.5 per cent to $ 17.9 m on sales which were 24 4 per cent higher at $164.3m.
Taxation rose from $2.6m to s7.lm and depreciation from $7.2m to slo.om.
The return on average ordinary shareholders’ funds improved from 10.3 per cent to 11.2 per cent, while cash
flow increased from $ 16.4 m to $25.4m. The current ratio fell from 2.2 to 1.7 to 1.
The group paid a total of $1,098,564 for the Whangarei sawmiller and timber merchants. J. N. Managh and Company, Ltd, and Matakana Afforestation, Ltd.
The latter purchase yielded 2472 acres of which 950 acres are planted on Matakana Island, near Tauranga, where N.Z.F.P. already owned 6155 acres. The consideration was cash and 300,960 100 c ordinary shares at a total premium of $782,688 which was put to reserve.
The combined goodwill element of $598,313, w>s written off again unappropriated profit.
Permanent link to this item
https://paperspast.natlib.govt.nz/newspapers/CHP19740717.2.53
Bibliographic details
Press, Volume CXIV, Issue 33588, 17 July 1974, Page 9
Word Count
784COMMERCIAL N.Z. Forest will need more funds Press, Volume CXIV, Issue 33588, 17 July 1974, Page 9
Using This Item
Stuff Ltd is the copyright owner for the Press. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons BY-NC-SA 3.0 New Zealand licence. This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.
Acknowledgements
This newspaper was digitised in partnership with Christchurch City Libraries.