A.C.I. profit rises but margins fall

Press, 19 November 1977, Page 19

A.C.I. profit rises but margins fall

NZPA Sydney Australian Consolidated Industries, Ltd, increased net operating profit for the six months to October 2 33 per cent to sAust7.lM, after a 10 per cent sales rise to 5318.6 M, but the group’s performance has not been as good as might first appear. Pre-tax profit for the six months declined 5 per cent to $22.8M. The pre-tax figure is the important one in the interim results, because it is unaffected by major distortions caused by the group’s policy on tax and specifically the accounting treatment of the trading stock valuation adjustment. The message in the half- ■ yearly report is that the iA.C.I. profit margin deteriorated: it earned at the rate of only 7.1 c in the dollar pre-tax. against 8.2 c in the previous corresponding six months. I Group net trading profit, before minorities, rose 17 per cent, but only after a 27 per cent fall in tax provision from $11.9M to SB.7M. The reason for this fall is the I

booking into the latest halfyear of an $BBl,OOO T.S.V.A. benefit. The result for the pre-1 vious corresponding period i is not comparable, because the directors have classified the SI.SM benefit for the period as an extraordinary credit in the latest period’s accounts. After allowing for extraordinary credits of $844,000 relating to minorities, net extraordinary losses emerge at 52.7 M. The profit after extraordinaries totals $4.4M, which is 20 per cent less than the previous figure of $5.5M. Interest expenses fell 8 per cent to $6.5M, but depreciation provision is steady at SI3M. An unchanged interim dividend of 5c a share will be paid. No account has been taken of the net future tax benefit amounting to S4M in respect of trading losses and extraordinaries included in the half year results, nor of the amount of net future tax benefit of $9.9M in respect of trading losses in previous years.