Borthwick comments on N.Z. scene

Press, 27 May 1978, Page 19

Borthwick comments on N.Z. scene

NZPA ~ ~ London Thomas Borthwick and Sons, Ltd, gives New Zealand a large share of the blame for a fall in profits for the six months to March 31. Pre-tax profit dropped from £S.IM to £2.2M, and net profit fell 59.6 per cent to £BBO.OOO, compared with £2.28M in the previous comparative period. An interim dividend of 2.4 p a share will be paid “but prudence may dictate a real constraint on the year-end dividend.’’ The directors said that there were three main influences affecting the group results — industrial unrest throughout the New Zealand meat industry, the unsatisfactory state of the British domestic meat trade, and the integration of the Matthews group, which Borthwicks took over last year. Borthwicks has 40 per (cent of its assets in New

Zealand, and the report said labour disputes there “have created a problem of the gravest kind for that country’s whole economy. “As a result, our New Zealand operation is suffering substantial losses, despite firm New Zealand lamb prices overseas, particularly in the United Kingdom.

“The labour situation in the New Zealand meat industry is a reflection of basic problems of economic structure facing that country, and consequently there is n.o short-term panacea. “Furthermore, the group is having to face in New Zealand new', and unexpectedly high, capital expenditure to conform with the increasingly stringent E.E.C. hygiene and veterinary requirements.” Borthwicks said that problems could not be solved overnight. “This is true especially of the immense and costly difficulties presented by the serious

national problems in New Zealand.” The “Financial Times” said that Borthwick’s interim report “is the latest episode in the group’s short, but unhappy stock market career.” (The company went public in 1976.) Borthwicks has had its share of bad luck, the paper said. Because of chronic labour troubles ,its New Zealand operation, which would normally contribute close to half its profits, lost more than £IM in the first halfyear. Borthwick’s £12.5M bid for Matthews Holdings, last year, now looks to have been a very expensive, and ambitious exercise, which has been draining both the company’s cash and management resources.

“The board says that it is labour troubles, its New Zeasition, Shareholders may well think otherwise,” the “Financial Times” said.