COMMERCIAL Improved sales, profit for Forest Products

Press, Volume CXVI, Issue 34156, 18 May 1976, Page 20

COMMERCIAL Improved sales, profit for Forest Products

(Net# Zealand Press Association?

AUCKLAND.

Improved trading in the final three months of the year to March 31 enabled N.Z. Forest Products, Ltd, to raise sales 6.4 per cent to $207.9m, and group net profit 4.9 per cent to $20,268,000.

The better demand experienced in recent months was expected to continue and increase, the directors say in the preliminary report.

Very keen competition was met on export markets and prices were well below levels ruling in the previous financial year. Prices for the major export lines — pulp and paper — were still low, but expected to rise with the growth in world-wide demand already taking place, the directors say. Domestic sales of most lines were sluggish, although picking up in the early months of this year, however, the trend may be affected by Government measures to reduce demand. Production from all major plants had been maintained at, or, near maximum capacity, and this had resulted in some increase in stocks.

The peak was reached in December, and a significant reduction had since taken place. This reduction would continue as the stock was absorbed by higher demand locally and overseas. The company had obtained substantial tax relief from incentives for increased sales to export markets and for new forest planting, the directors say.

The devaluation of the N.Z. dollar last August, and a steady erosion since then of N.Z. currency had meant provision is needed to cover the extra sum which would eventually be required to repay overseas loans, mainly in the period 1978-1982. This, as yet unrealised, loss had been provided for by a transfer of slom from unappropriated profit and had not been taken into account in arriving at the results for the year. The profit was after providing sl.2m more for depreciation at $12,092,000 and $412,000 more for tax at $6,022,000.

The final dividend of 6c a share (12 per cent) would make a steady 12c a share (12 per cent) for the year, requiring a total of $3,686,000. The earning rate on capital was 34.0 per cent (last year 32.6 per cent) and on shareholders’ funds 10.9 per cent (11.3 per cent).

Shareholder’s funds were up s7m at $191,000,000 including ordinary capital of $58,604,000 (up $203,000).

While these figures were on a historical cost basis of shown.

accounting, final figures would be on an equity accounting basis.

Profits and retained profits of associated companies are expected to increase group net profit about $250,000, and shareholders’ funds would be about $1,250,000 higher than the figure Provided Supreme Court approval was .given (shareholders had already endorsed the principle) the directors would recommend that in lieu of final dividends, distributions be made from the share premium account to all shareholders who did not choose to receive dividends from the profit. Because the interim dividends were paid from real-

ised capital profits, the whole payout for the year would be free of tax.

The final dividend is payable on August 26, ex Aug ust 9.

Because of further borrowings, financial charges for the year at $8,627,000 were $784,000 above those for the previous year.

As in the previous year, interest payments and financing charges incurred on expansion projects not yet contributing to profit had been capitalised as a cost of those projects. This year $2,761,000 had been treated in this way ($361,000 last year).