Feltex profit fell 71 p.c.

Press, 8 March 1978, Page 14

Feltex profit fell 71 p.c.

PA Auckland Sales by Feltex New Zealand Ltd,’ fell only 0.6 per cent or $700,000 to 5113.3 M in the half-year to December 31, but net trading profit fell 71 per cent from $5.9M to SI.7M compared with the previous corresponding six months. The interim dividend has been maintained at 7.5 per cent (3.75 c a share). The total was raised from 15 per cent to 16.5 per cent last year, when net trading profit rose 44 per cent to 511.5 M. Over-stocking by carpet retailers, and the depressed state of the motor and building trades were mainly to blame for the setback, the directors say in the halfyearly report.

Profit margins were seriously eroded by cost inflation, and intensified competition in all markets, they say. The recent increase in the money supply, and prospects of falling interest rates could assist prospective home-owners, and this could have an important bearing on the results of the largest division. There are indications that retailers carpet stocks are being reduced and sales by this division could improve before the end of the financial year, the directors say. However, the balance-of-payments deficit, and the inflation rate give little hope

- for an early' recovery by the • economy, and, in the short - term the group will be very ■ reliant on external markets, they say. » The unaudited profit was > after providing $2.5M less s for tax of $400,000, and ? $500,000 less for minorities 1 of 5200.000. > In addition to the SI.7M t trading profit there were extraordinary profit items 3 arising from the sale of pro--sper t i e s of $1,400,000 s ($100,000) making the total . profit for the half-year 5 S3.IM. compared with S6.OM 2 Equity interests in the profits of the associated companies were minor and have been excluded, and so • have unrealised exchange s gains.

Export sales were maintained at SIOM, despite more competition in Australia. All divisions made determined efforts to achieve more orders outside Australia, which is traditionally the group’s largest overseas market. Recently the company obtained the largest order from outside Australia yet obtained by a New Zealand carnet manufacturer. The factories are currently working on orders from the Middle East, North America, Asia, and Australia. Further orders are being negotiated. Investment in plant has been curtailed, but where opportunities are seen new fixed assets are being installed. For example, the reduction in disposable incomes has transferred some demand from new tyres to retreads and a major new retreading plant is being built at Mangere. Vitafoam N.Z. Ltd, in which Feltex has a 49 per cent interest, recently opened a factory in Christchurch, and a new complex in Auckland will be ready soon.