“N.Z. Brew. carries burden”

Press, 13 July 1976, Page 22

“N.Z. Brew. carries burden”

Because application to recover increased costs from the Department of Trade and Industry or the Commerce Commission takes lengthy investigation and time, New Zealand Breweries, Ltd, is forced to carry the burden of these costs which it cannot recover retrospectively, says the chairman (Sir Clifford Plimmer) in the annual report. However, every effort will be made to show the appropriate authorities that industries like New Zealand Breweries, which use indigenous materials and provide employment are entitled to a reasonable profit, he says. As announced, group net profit rose 24.8 per cent to $5.2m in the year to March 31. The profit shows a return of 4.9 per cent on shareholders’ funds, after writing up land and buildings by $42. Im to a basis of 90 per cent of valuations compared with 6.7 per cent in the previous year.

Group sales rose 9.9 per cent to $170.8m, and the total sales of bulk and packaged beers by volume were slightly ahead of the previous year. The export division based in Auckland again achieved record sales, rising 21.9 per cent, and generating $2.7m in overseas earnings, including grain and dairy products, Sir Clifford Plimmer says. The production of bulk and packaged beers by the brewing division continued satisfactorily during the year, and steps to meet increasing demand continue to be taken when required. This includes the construction of a new brew house for Auckland, which is to begin production in March, 1977. The liquor marketing division, formerly part of the brewing division, worked successfully during the year in a very competitive environment, he says. Another new section, the corporate services division, whose responsibilities include research and public relations, investigated the possible development of some of the group’s properties, but this is part of a longterm programme.

New Zealand Wines and Spirits, Ltd, in which the group holds a 50 per cent interest, had a successful year; profit rose almost 21 per cent and sales 20 per cent. “The sales of the 50 per cent owned Leopard Brewery, Ltd, have been well maintained. Unfortunately, price control falls with particular severity on smaller brewing units.” The manufacturing capacity of the plant belonging to The Canterbury (N.Z.) Malting Company, “ Ltd, at Heathcote, Christchurch, is being fully utilised, and plans are being made to establish new maltings in the North Island where good quality barley can be grown. This will minimise transport costs of malt for the North Island users, Sir Clifford Plimmer says. Although the sales of Stresspan Industries (Wellington), Ltd, were well maintained during the year, the adverse conditions of the building industry affected profits. The profit was after providing $912,000 more for depreciation at $6.1 million

I ($974,000 of this in excess lof tax rates), SI.7M more I for interest charges at SS.OM, and $843,000 more fpr taxation at SS2M. The resuit was boosted to $5.7M by recovery of taxation charged in previous years. Of the $5.2M profit only S3.IM is transferred to the appropriatiori account: 52.7 M is written off for taxadjusted exchange fluctuation losses. The dividend, restored to 15 per cent, takes $3.5M, covered 1.5 times by the trading profit. Net current assets increased $2.7M to $i3.7M; the current ratio is 1.5:1. Shareholders’ equity increased from 44 to 55 per cent, mainly as a result of the assets revaluation. The funds — S44M higher at $106.6M — are comprised of $23.1M capital, $41.8M capital reserve (S4.OM of it realised) and $41.7M revenue reserves. The shares last sold at 81c for a dividend yield of 9.3 per cent and an earnings yield of 13.9 per cent. The price-earnings ratio is 7.2, and the net asset backing 231 c a 50c share.