COMMERCIAL Allen fails to keep up with inflation

Press, Volume CXVI, Issue 34105, 18 March 1976, Page 22

COMMERCIAL Allen fails to keep up with inflation

(New Zealand Frees Association.) ' AUCKLAND. Although Allen Industries, Ltd, increased its profit in the latest vear 25.1 per cent, the increase in the last tW o years has been less than the rate of inflation, the chairman‘ (Mr L. Ri. Allen) says in his review of the year to December 31.

He says that more and more working capital is required merely to maintain sales volume. Continuing increases in prices to recover cost increases naturally meets a certain amount of buyer resistance and makes it difficult to maintain sales volume, he says. However, a reasonably satisfactory year is expected from the manufacturing division, but any further tightening in the present economic position might have some adverse effect on sales. ■ This has already been j noticed in the bookmatch diI vision.

He says the derived from devaluation ' last year will be partly offset by increased costs of imported paper. Mr Allen disc losed that the group is currently engaged in increasing its investment in property. A new factory building was completed duriu g the year and rents were received from this for nearly half of the period. Further industrial land was bought towards the end of 1975. Various _ building projects are being investigated.

Sales of New Zealand calendars, and the > speciality division, were maintained.

A small profit was achieved by the bookmatch division, but sales are dropping and the directors expect a lower return in the present year. Sellotape Industries’ sales continued to grow, but profit was held to the level of the previous year. As announced, net profit was $69,087 higher at $343,890. It was after providing $B4O more for depreciation at $38,725, and $45,700 more for taxation at $119,492. The steady 15 per cent dividend requires $102,600. The earning rate on ordinary capital rises from 40.2 per cent to 50.3 per cent, while that on average shareholders’ funds is up from 11.5 per cent to 13.1 per cent.

The accounts show shareholders’ funds $213,199 higher at $2,733,479, including steady ordinary capital of $684,000. Term liabilities are $4OOO lower at $49,000.