ABSORBED COSTS

Press, Volume CXV, Issue 33987, 30 October 1975, Page 22

ABSORBED COSTS

D.LC. capacity exhausted (N.Z. Press Association) DUNEDIN. Under the present economic conditions the capacity; of the D.1.C., Ltd, to absorb .additional costs was exhausted, the chairman, (Mr H. C. Harford) said in the report. To ensure profitability, and financial stability, it was essential that restrictions on profit margins be relaxed, or the rate of company taxation reduced, he said. The rate of growth of i sales, and the unrealistic profit margins allowed by the Government. were insufficient to offset higher costs, especially in wages and salaries, Mr Harford, said. As reported, the group net profit fell 38 per cent, to i 5671,043 in the year to July; (31 when sale revenue rose; '4.3 per cent to $21.5m. The net profi—t on sales; Tell from 5.3 per cent to 3.1 [per cent. I The earning rale on average shareholders’ funds fell' ifrom 13.2 per cent to 8.1 per; Icent. The gross profit fronts s trading rose marginally to! ; s7.om, but the profit before provisions for tax and; depreciation fell 40.1 per' cent to sl.lm. The net profit was after; providing $280,156 less at. $520,644 for tax, but; $112,824 more at $336,8051 for depreciation. The directors will recom-j mend a steady annual divi-l dend rate of 14c a share, which is covered 1.6 times. ' The problems related to! overseas trading deficits,; make the prospects for the! current year difficult to forecast. Plans for expansion ini Moray Place were well ad- ‘ vanced and it was expected! that the project would go toj tender in March next year.; Mr Harford said. Export fabrics rise The value of exports of clothing and knitted fabrics made in New Zealand increased by 19.6 per cent from f.o.b. $3.4m to s4m in the year to June 30, the conference of the N.Z. Textile and Garment Manufacturers’ Federation was told at Wairakei. Clothing of all exported fabrics, except knitted, increased by 26 per cent