N.Z.M.C. strength in small car range

Press, 13 July 1976, Page 23

N.Z.M.C. strength in small car range

Not all the restraints! on motor vehicles intro- I duced by recent New ; Zealand Governments [i have had an adverse L effect on the profit ofL New Zealand Motor Cor- r poration. Ltd, the annual!) report reveals. One effect of the restraintsj 1 has been to divert the demand, for cars into the lower-priced,, low-powered, more economical segment of the market.! says the chairman (Mr W. N.| Norwood). "In 1973 only 58.6 per cent! of new cars registered were] 1 in the 0-2200 c.c. class. Ini 1975 this had increased to 82.5 per cent. “This is the segment ofil the market in which the 1 group’s Austin-Morris range of cars compete, and in [ which the company is strongest.’’ Although the total car ' market fell 10.7 per cent to 1 78,116 units, the sales in the Austin-Morris range rose ! nearly 1 per cent to 12,292 ( units “With the introduction of the Honda Civic, the group expects to increase its market share further, and it should be noted that the locally assembled model has already' achieved ready acceptance. “It is sufficient to say that the Corporation has cause for confidence in the contribution the Honda franchise will make to profits,” Mr Norwood says.

I One area of concern has i been the Corporation’s inlability to satisfy a favourable market for specialist I cars, light and heavy comimercial vehicles, tractors and (spare parts, because of the I lack of supply from Britain land shipping problems. i N.Z.M.C. is very conscious of the problems that British ! Leyland has had to face, and (it is watching with interest (the re-building of the com- | pany that is now taking (place, he says. ( “When the Ryder Report (was first issued the directors ■of N.Z.M.C. stated they bell ieved the United Kingdom (Government’s participation (in British Leyland would greatly strengthen that I organisation, and through that, N.Z.M.C. itself. No cause is seen now to modify that statement.” Supplies of the specialist car range — Triumph, Rover, and Jaguar — were severely restricted during the year because of various factors beyond the group’s control. This meant the sales of specialist cars fell 34.6 per cent to 4016 units. In 1976 the proportion of imported fully-built cars fell from 4584 to 902 units, but the gioup was able to increase production in its assembly plants by 1800 vehicles from completely kno'.ked-down components. This enabled the Corporation to provide greater employment, absorb overheads and ( increase profits, Mr Norwood says.

The company’s accounts refl e c t the continued strengthening of the group’s financial position which has occurred in the last four years, lor example, the latest profit is almost double the $2 3m earned in the year to October 31, 1972. As previously announced, group net profit in the year to March 31 was $4,420,000 — an increase of 21.9 per cent on the previous profit of $3.6m (after adjusting the 17-month period to a 12-month-one).

The profit was after providing 30 per cent more for depreciation at $998,000, 83 per cent more for interest charges at $440,000, and 40 per cent more for taxation, at $2.9m. The earning rate on average shareholders’ funds improves from 10.8 to 12.8 per cent.

The dividend for the 12 months of 10.6 per cent takes $1,590,000, covered 2.6 times by the trading profit.

Net current assets improved sB.2m to $22.8m, the current ratio is 1.7:1.

Shareholders’ equity is unchanged at 46.6 per cent. The funds at. $34.0m — $2.9m higher than last year — are comprised of $15.0r0 capital, 5.0 m capital reserves, and $14.0m revenue reserves.

The shares last sold at 115 c. for a dividend yield of 9.2 per cent and an earnings yield of 24.3 per cent. The price-earnings ratio is 4:1, and the net asset backing 227 c a 100 c share.