Freightways blames price control for economic ills

Press, 27 October 1977, Page 24

Freightways blames price control for economic ills

PA Auckland It is not clear whether the Government wants profit or price control in this inflationary era, the manag-ing-director of FreightwaysExpress, Ltd (Mr R. H. Pettigrew) says in the annual report. “The objectives of the two extremes were poles apart. Price control over a period probably contributed more to inflation and inefficiency than any other device known to politicians. “As long as a manufacturer, or whoever, is allowed to recoup his costs plus a margin, efficiency and ingenuity are no longer necessary. The end result is a cost-plus society in which the consumer will pay in the end,” Mr Pettigrew’ says. Profit control should move towards profit surveillance. Action could then be taken to cure undesirable trends, rather than singling out particular events. The private sector is the only source of investments to increase the economic growth-rate. Development requires investment funds by way of retained earnings, term borrowings, and equity issues — all of which will depend on the maintenance of a financially healthy corporate structure. Unless these conditions were achieved the objectives of increased overseas earnings and future employment will never be reached, he says.

Most of the groups head office functions had been transferred from Wellington to Auckland during the year, but the company will maintain a small head office team in the capital.

The annual meeting in Wellington, on November 18, will be asked to approve a resolution changing the company's name to Freightways Holdings, Ltd, because of the group’s continuing diversification, says the chairman (Mr J. A. Valentine). The name of Freightways Express will be transferred to a holding company, now known as Allied Freightways, Ltd. In the year to June 30 gross revenue rose 41 per cent to a record S77M. Two new acquisitions had their results included for the first time. Debtors had only increased 16 per cent. Had they increased at the same rate as gross revenue, a further $2.5M in cash would have had to be found to finance them.

The group increased its holdings in New Zealand Maritime Holdings, Ltd, the company which holds 50 per cent of the shares in the Union Steam Ship Company. An additional 236,000 shares was acquired, and the company now holds 13.3 per cent of N.Z. Maritime. In addition, in accordance with policy of maintaining a 10 per cent shareholding in the T.N.L. Group,, Ltd, further shares were bought. The net profit was $3,201,000 ($1,730,000). The final dividend of 8 per cent together ivith the 8 per cent interim, takes $1,286,000 ($861,000). The year’s total dividend) is being paid on capital in-) creased by the one-for-three bonus issue, and is equal to 21 1/3 per cent on prebonus capital. The final dividend will be tax-free.