COMMERCIAL C.P.D. profits lower in first quarter

Press, Volume CXV, Issue 33932, 27 August 1975, Page 19

COMMERCIAL C.P.D. profits lower in first quarter

(New Zealand Press Association) WELLINGTON. The profits of Cable Price Downer, Ltd, for the first three months of the current financial year to June 30 show a slight drop compared with the same period for last year despite an increase in turnover of 20 per cent, the chairman (Mr A. L. McLean) told the annual meeting yesterday.

Mr McLean said the lower profits were due to mounting overheads and erosion of profit margins. “We are doing our best to contain expenses, but in these days of high inflation it is a nearly impossible task,” he said. The outlook for the rest of the year was obscure, and he would prefer not to make any prophecy. But he believed C.P.D. would come through “at least as well as our' competitors — in fact I .hope a little better,” he said, Mr McLean said the recent 15 per cent devaluation of the New Zealand dollar was the “last straw” in the company’s problems with its overseas Eurocurrency loan of Ssm. “The result is that to repay s.3m on September 18 we need an extra one million dollars,” Mr McLean said. “We were encouraged to

borrow overseas by the Gov-| eminent, together with other private enterprise companies, in August and September of last year, when there was terrific competition for local funds. “The Minister of Finance: at that stage announced re-< lief from with-holding tax; on interest on overseas borrowings. This made it easier! to obtain funds outside New! Zealand,” Mr McLean said, i “We needed funds rather: urgently for increased stocks! and borrowed SNZSm in! U.S. dollars, as we thought that this currency was the I least dangerous from the exchange risk angle.” Mr McLeaii said C.P.D. was “unfortunate" because in September 1974 the New Zealand dollar was devalued, “and it is the loss of $353,000 on this devaluation which we have written off in the March 31 accounts.” “However the U.S. dollar has continued to harden, since March 31 and the 15 per cent devaluation is just the last straw.” The extra Sim loss is something entirely outside our control, being due to the large fall in value of New Zealand currency. The Prime Minister (Mr Rowling) has promised to have a look at these substantial losses being incurred and we do

j expect some relief, probably by way of tax deductions.” Mr McLean said that a more fortunate aspect of the devaluation was that C.P.D. had covered itself by purchasing forward exchange for its norma! trading purposes, and the loss anticipated on firm contracts “is very small indeed." “In the long term, of I course, all our selling prices ion imported goods will be j increased by 15 per cent at j least, and what effect this J will have on our volume is j unknown.” Shareholders voted to give the directors the right to issue shares in redemption of convertible securities 1 when they fell due for redemption, and the authority to issue shares to staff, but limiting the total sum of ' any such issue to a maximum of five per cent of the issue capital of that class. The meeting also voted to ■ allow the directors to print ' their signatures on all types of scrip including debentures and convertible securities. Previously the articles allowed them to print their signatures only on share certificates. Three directors who retired by rotation, Sir Clifford Plimmer, Mr W. R. Day and Mr R. S. O’Hagan were re-elected.