Rickstan striving to recover from loss

Press, 18 December 1976, Page 19

Rickstan striving to recover from loss

Commercial

PA Auckland! Rickstan- Holdings. Ltd furniture manufacturer, had a ] OS s of 5154.244 in the vear to March 31. The company earned a profit ol $30,967 the year previous, which was less than a third of the record profit ol $97,886 for 1973/74. No dividend is recommended for the latest year. In the three months tc September 30, Rickstan hac a profit ‘‘which in itself is a satisfying reversal," 4he chairman (Mr J. S. Alexan deri says in the annual re port. Of the loss for the last half vear, a large proportion occurred in the first half ol the year. The position improved during the second six months but losses continued

l|to June 30. The losses were! caused by reduction in] i demand, necessity for stock: i clearances, and tight liquid- • ity, he says. Provided that the higher 11 sales now being experienced Ij’ontinued, it was expected hat the improved trend towares higher profit would continue. ; “Stock-reduction has i neant in some cases a low- : /ring of gross profit in a tlanned move to assist iquidity,” Mr Alexander ’ays. i Stock to the' value of ' 580,000, some of which was I surplus to requirements as i- he result of closing the Gis- < I borne retail store, was sold II for less than cost. Total physical reductions land writo.HnLvn< riiinnp the

and write-downs me vear amounted to $128,159. J r “General stock reduction;, by our retail stores had a c dampening effect on norma! demand on the manufac-p Turing units. These manufac-T I Luring units were not able top increase sales in other mar- ' keting areas quickly enough, l to supplement this lower de-1 * mand,” the report says. 1 A loss of $77,136 was suffered by two retail stores in I ‘ 'particular (locations not! 1 (given). Steps had been con-(I 'eluded to lease one of theP (stores, and re-locate the I other at a very much re- 1 duced rent. p i A shortage of funds re- ( Iduced Rickstan’s ability to 1 I buy goods from outside sup-| < i pliers for its stores, which | (reduced their sales and pro-1 : fits. ( Increased labour and matj erials costs affected the sale lof the company’s kitchen(units, but two new units I have been added to the : range, and orders showed (that these had high market I acceptance. I A change in policy, to set-| I ting direct to builders and! (developers, though commis- I I sion agents, was expected to. (increase sales. • ! Rickstan Industries (South (island), Ltd, in September! (employed a new manager' | with a strong sales and mar(keting background, particu-i parly at builder and com(mercial building level. This should help overcome many problems which had resulted . : from a reduction in demand Ifrom commercial building, (the report says. i Output of the marble fac- ( jtory. tn Christchurch, had !

-Ibeen doubled, and an effort /(was being made to promote Jits products. I Mr Alexander, says that • the company is now ideally (placed to enter the Australian market with volume I deliveries of products. j The company had obtained approval to ship some products into Australia duty-free., I (These were highly-com-ipetitive in that market. s Export-production of both | -vanity-units and kitchen; t joinery offers a large degree; ;;of diversification “from an i r i over-dependence on retail! • stores, and a depressed local! f|market,” Mr Alexander says, jl The export of artificial-1 s(marble manufacturing rights,! -■under a patent held for the diSouth Pacific, and South-! least Asia, also offers a large; . potential market. A patent! (:has been sold to Fiji, but

the world recession has I halted sales in Singapore, j and Japan. Mr Alexander says that! the company is seriously j handicapped by a shortage I of capital, which has inhib-1 ited growth in various po- I tential profit-centres that. could have been developed! more fully. Poor dividend returns in! ;earlier years prevented the! board at that, stage from I proceeding with an ordinary! share issue. Approval had been ob-; tained for a specified prefer-! ence shares issue, but this! (has been postponed. I It is as important that the I (directors take, steps to i ! ensure an injection of capi- j jtal as soon as possible. I Various proposals for res-1 tructuring capital are at! present under consideration. These include a merger by; the allotment of a large par-, cel of specified preferences.; Discussions are proceeding I with several interested par- • : ties. j Efforts meanwhile are I being made to improve: I liquidity. The balance sheet shows that accumulated profit at March 31 was down to. I $3341 from $157,585 a year (earlier. Fixed assets were $6195 :higher at $392,938. Term liabilities were reduced $74,726 to $308,917. Shareholders’ funds fell $154,244 to $342,699. Net current assets fell : $235,328 to $255,873, and the ! current, ratio fell from 2.0 to ! 1.4 to 1.