N.Z. Forest “produce and hope” policy

Press, Volume CXV, Issue 33959, 27 September 1975, Page 19

N.Z. Forest “produce and hope” policy

(New Zealand Press Association; AUCKLAND. It was impossible to predict how long N.Z. Forest Products, Ltd. could maintain full production and employment, the chairman (Sir Reginald Smythe) told shareholders at the annual meeting.

The company would per-| jsist with a policy described! ias “produce and hope,” he! Isaid. The company’s belief that,' ithe long-term demand for,; : pulp and paper, on bothl oca! and export markets,! {would exceed supply was re-1 ■ pealed by the chairman, but I ! the timing 'of the upturn; ’was unpredictable. Because of the likely ! effect on profitability of the j (present company policy of ! stockpiling excess produe-; Ition, and the job prospects! [for some of . the 8300 i employees, it was surprising that none of the several hundred shareholders at the ! meeting sought further; details of N.Z.F.P. intentions. ; Sales and net profit for ; the first five months of the.; current year were lower; : than in the previous year, ’the meeting was told The SUS3Om balance of the SUS7Om overseas bank I loan ‘arranged last year.

I would probably be drawn; I this financial year, Sir Regi-; jnald said. In addition, a smaller ‘amount of term finance had [been arranged with overseas ;plant suppliers. ; Devaluation would cost, IN.ZF..P. SNZBm more to | repay these loans providing I present currency values; held. ' This was unlikely because; ithe SUS7Om loan repay-! Iments did not start until 11978, and the final payment’ ‘is due in 1982. The effect of devaluation on company profits would be; beneficial, as export sales in New Zealand dollars would be increased because sales to; overseas markets were made; mainly in American dollars! or, in the case of Australia, | ■in Australian dollars.

| This would be offset to 'some extent by the increased cost of imported raw materials and higher ; interest payments on overseas loans. In an address that was generally sombre one small item of good news was that the company had decided toi pay interim dividends. The first interim dividend (would be paid next March, and it was intended to make the payment from realised •capital profits, The rate is yet to be determined. The move should also (assist. N.Z.F.P. internal finan-! ;cial management. Under the policy of paying a one-lump sum dividend [annually, the company has; I had to find more than $7.3m; jto cover its dividend 'cheques this week