Saunders profit rises

Press, 22 October 1976, Page 18

Saunders profit rises

The rise in the profit of R. W. Saunders, Ltd, in the year to July 19 was once again below the inflation rate, and also significantly under the permissible profit allowed under the Stabilisation Regulations •of 1974, says the chairman (Mr W. A. Hadlee) in the annual report. However, he says that despite continuing inflation and other adverse factors the group is reasonably opti> mistic.

“The coming year will not be easy, but satisfactory results are anticipated. Much will depend upon the Government’s handling of the economy and industrial relations.”

The group’s merchandise continues to be a leader in its respective fields and is selling well at retail and consumer levels.

National promotions, last year, have advanced the market share of the group, and with new products al-

ready introduced and others planned, the group . will maintain its high place among New Zealand manufacturers of fashion merchandise, he says. “Many manufacturers and retailers are finding it increasingly difficult to generate sufficient funds to maintain the inventories necessary for increased sales.

“Reduced earnings rates on shareholders’ funds are widespread, and this trend must be reversed if companies. are to expand and provide the employment opportunities for staff associated with these industries.”

Some apparel manufacturers are exporting increasing quantities of clothing to overseas markets. However, overseas sales should only be sought to supplement a strong home-based market he says. “Because of the effects of inflation on real profits and liquidity, any efforts aimed at reducing the rate of inflation should be supported. Industry has borne its share of restraints, and as an example, profits of R. W. Saunders in the last three years have increased on average 7.5 per cent per

annum, whilst wages and salaries have increased on average by 16.8 per cent per annum.” As announced, group net profit rose 11.1 per cent to $180,244. The profit was after $17,807 more for tax at $143,275, $5867 more for interest on fixed loans at $40,882, but $18,611 less for depreciation at $46,879.

The earning rate on average shareholders’ funds declined from 15.9 to 15.4 per cent. The annual dividend rate is a steady 18c a share (18 per cent); it takes $54,000 and is covered 3.3 times by the profit. Working capita! rose $177,742 to $1,067,117, but the current ratio is steady at 3.0 to 1. Shareholders’ funds rose $176,342, $1,257,472 including $300,000 ordinary capital, $63,036 capital reserve, and $894,436 revenue reserves.

The last-reported sale of the shares was at 240 c, giving a dividend yield of 7.5 per cent and an earnings yield of 24.8 per cent. The price earnings ratio was 4.0 and the net asset backing 419 c a 100 c share.