Commercial

Press, 8 May 1978, Page 18

Commercial

By

ADRIAN BROKKING.

The sharemarket was fully I firm last week, on good vol(umes. The underlying reasons for i the market’s strength have I not altered much, but minor I full points during the week were the announcement of our improvement in the balance of payments, while most company profit reports were good. With the prospects of ai small reduction in the rate! of inflation, the market is likely to hold firm until the Budget, and it would not be surprising if the Budget were to provide a boost. While the immediate outlook for the economy is far from good, the sharemarket has already discounted most of it, and the present price levels must be considered realistic. The big news came from! Marac, National Insurance, I and Woolworths. Marac performed well in a; difficult year, but its profit, rise of 38 per cent owed much to taxation incentives for exports. Marac is a finance company, but it has qualified for the incentives by arranging ( and financing exports. However, this type of incentive ( will not be so freely available in the future. The reduction in tax was larger than the profit increase, and that is probably a better measure of how the industry is coping with the current recession. Also significant is the fact that the profit in the second half was 20 per cent below that] of the first. National Insurance report-j ed a 25 per cent rise in: profit for the first six

months of the year. Although the directors were careful to emphasise that the results for the half do not necessarily set a trend, the outlook for the insurance industry so far appears to be good. Woolworths’ profit for the first half of the year improved almost 30 per cent — a recovery from the 20 per cent drop in the same period of the previous year. The result is about 3 per cent better than that of two years ago. Again the directors are careful to point out that the second half is likely to be difficult. But any retailer who manages to keep profitability even constant is not doing too badly in these difficult times for the industry. Deanes, that excellent company, almost trebled its profit in the latest 13 months to February 28. Again the directors warned the shareholders of the prospects of falling profitability; they also warned the investing public not to create a false market for the shares. The directors are to be commended for this statement: it provides the guid-

commercial editor

ance the share market needs (but not often gets) from the people who are in the best position to give it.

Amalgamated Batteries’ shares rose 40c during the week. The company reported a good result for the first ihalf, and the payment of a 5 per cent tax-free interim dividend.

A 2:5 issue of 121 per cent specified preference shares is planned — this should be quite profitable to the shareholders. The shares of Hodder and Tolley rose 12c to 200 c; the company, one of the latest to join the list, has established an enviable growth rate since going public. The shares of J. Rattray, and Donaghys also caught the eye with rises of 10c leach. Another 10c rise was chalked up by C.F.C.A., the Timaru-based stock and station agent with considerable fishing interests. The company announced that it is buying two new trawlers in Europe, to be working out of Timaru early next year. The move is expected to increase the exports of Feron Seafoods, Ltd, its subsidiary, from S3M to more than SBM.