Price controls reduced Farrier margins

Press, Volume CXIV, Issue 33656, 4 October 1974, Page 11

Price controls reduced Farrier margins

Although Farrier Waimak, Ltd, increased sales 44 per cent to $2.3m in the year to June 30, price controls prevented a comparable increase in the pre-tax profit.

The sales increase came> from a high level of activity in the division. 11 months operation of the Pound Road plant, and a full year’s sales from the Readymix concrete plant bought in December, 1972. The pre-tax profit increased 17 per cent to $118,087. The fall in net profit margins was directly due to the operation of the Stabilisation of Prices Regulations, which required the company to absorb a proportion of increased wages, and delayed the recovery of substantial increases in fuel and other

s costs, the chairman (Mr C. f W. Evans) says in the annual , report. e The company’s expansion | 1 in recent years has been - made possible by better proi fits and increased borrowing. If expansion is to continue 1 at a modest rate, the replacement programme maintained, - and provision made for adee quate working capital, addia tional funds will be required, h Mr Evans says. a As reported, the group net - profit rose $19,608 or 30 per d cent to $84,907. .1 This was after providing r $9lOO more for depreciation - at $138,302, but $2688 less for tax at $33,180. Interest . on fixed loans rose $14,297 L to $22,317. The earning rate on aver- | age shareholders’ funds rose I from 13.9 per cent to 16.1 . ) per cent. * ( The ordinary dividend rate has been increased from 10 to 11 per cent (5.5 c a share) l > and 5 per cent is from capis tai reserves. t Shareholders’ funds ’ After allowing for the preference dividend payment of $5750 the 11 per cent J ordinary dividend was covered 3.6 times by the net : 2 profit. Shareholders’ funds were; ® $59,157 higher at $559,902,1 „ including steady capital of' 11 $300,000. Capital reserves will be re-1 tduced $lO,OOO to $25,238 by! ° i the 5 per cent dividend paye 'ment from them. The earning rate on aver-) '-■age funds rose from 12.8 perl o I cent to 16 per cent. '• I Working capital fell I e $57,983 to $9945 and the cur-1 rent ratio fell from 1.2 to 1.0 e to 1. il Term liabilities rose d $143,250 to $297,182 with f mortgages $160,000 higher at e $200,000. Fixed assets rose I- $258,450 to $825,819. d Sundry debtors were rey duced from $235,831 to $213,189 by the payment of d the outstanding amount by - Columbia Blocks, Ltd, which a was sold to Firth Industries, e Ltd. t Proprietorship fell from e 47.6 per cent to 41.1 per e cent. g At a price of 75c the - ordinary shares yield 7.3 per a cent from an 11 per cent r dividend, and have an earnings yield of 27.4 per cent.