Cyclone expects fall in farming sales

Press, 11 June 1977, Page 17

Cyclone expects fall in farming sales

The sales of Cyclone In-j. dustries (N.Z.), Ltd, have! opened strongly in ' the.! (present financial year, but L i indications are that the de-ji tnand for farming products! Swill begin to ease because ofl I a levelling off in farm prices land increased costs to farm-1 • ers, says the chairman (Mr! IT. .1. N. Beyer) in the annual I 1 [repr -t. It is true to say that Cy-il ! clone does well when the I 1 'New Zealand farmer pros-!' |pers, he says. d There is no immediate:, prospect for an increase ini' (school furniture sales, but! the ales of caravans should: (continue at a good rate. I’ However, it is imperativel E that costs should be allowed, to be passed on as soon as ( they occur if a reasonable • level of profitability is to be 1 achieved. 1 The first half of the last - financial year saw sales re- 1 stricted because of a short- 1 age of raw materials from 1 the wire mill. “This shortage was alle- i viated by the importation of ’ wire supplies from overseas, < but the situation pertained 1 at a time when all orders, < especially those from the : agricultural sector, were at a t high level. "The new factory and ; offices at Macs Road were i

jalso occupied during, (this period, . and this I (caused production problems) (particularly in the tube de-j ipartment where three weeks’ (production was lost. I “The benefits of improved! (plant lay-out and better! (working conditions soon be(came apparent, production' (in March, 1977 reaching al (record level. i “The total cost of shifting! (plant and stock amounting! Ito $35,631, has been written] (off against the profit,” Mr| : Beyer says. The production of cara-j (vans began during the year I i in Timaru, and the premises! | which we lease have , recently been extended to: (allow increased production. } ; Furnware Products, Ltd, ■ which in the previous year had earned a record profit, felt the full impact of reduced Government spending and big cost increases which could not be passed on, and ended the year with a small loss. “The reduction in purchasing by the Education Board where Cyclone has a supply contract was such that overheads could not be spread over the sales made. This resulted in a loss on the contract, says Mr Beyer. As reported, the equity group net profit rose 3 per cent to $265,343, including'

; I $115,224 from the equity] ; I share of an associate com- : > pany. ■j However, on a group net! ;( profit basis there was a fall! (of 29.2 per cent to $150,119.|] [(Trading profit rose 30.5 per]; •(cent to SI.7M. ■i The profit was after pro-!' Hviding $20,691 more for taxi. 11 at $115,397, and $45,083i! (more for depreciation at!’ ;! $93,509. Interest payments!. ;lrose $29,461 to $67,091. 11 Shareholders’ funds rose < '(567,753 to $2,100,529 which)( I consists of steady paid-up ■(capital of $861,667. revenue!) •reserves up $145,019 toll ($1,018,725, and capital re-]] : serves down $77,266 to ( i, $220,137. i! ( The return on average ji . funds is 12.8 per cent (7.61 • ' per cent previously). (( , A recommended final divi-h dend of 3c a share makes a|’ ; steady 5c a share (10 perp cent) for the year, requiring j I $77,667. It is covered 3.4 i I times by the orofit, less the ‘ preference dividend. Working capital fell ( , $150,830 to $1,344,196, and 1 ■ the current ratio fell from , 3.7 to 2.1 to one. I Term liabilities increased ; $171,880 to $757,744. At 60c the shares have a dividend yield of 8.3 per ■ cent and an earnings yield ■ of 28.2 per cent. The price- . earnings ratio is 3.6.