Share market steady

Press, 28 August 1978, Page 14

Share market steady

By

ADRIAN BROKKING,

, commercial editor

The New Zealand sharemarket finished last week at about the same level it began, after a low point of 320.72 on the N.Z.O. index on Wednesday.

Nothing much happened ion the financial scene to make a big impression either way: company reports, on balance, were reasonably favourable, while the firming of interest rates was confirmed.

A surprising number of .companies turned in fairly good profit reports, and even in those cases where (profitability was lower, the | tone of the reports was more optimistic than has been the case for some time. However, two of the largest companies reported substantial profit reductions, ah 'though in both cases these had been anticipated, and were absorbed by the market in its stride. Challenge Corporation’s .profit for the year fell 20 ; per cent: that for the first I half was 50 per cent lower.' so the over-all result was

- not unexpected. However, the final result showed substantial benefits from taxation and capital profits, and the trading profit before tax for i the year was about half that jof last year. I Challenge always in-

■ corporates profits on sale of; : surplus assets, but as these : were both large and con- ■ stant, they had a large pro- : portionate effect on the result.

The company appears to be retreating from its steady dividend policy: the bonus issue has the effect of holding out a 10 per cent dividend increase. TNL Group reported a 30 per cent lower profit for the

year; again this had been foreshadowed in the interim I reports. The results for the final quarter had shown an improvement over the same period last year, the directors said. But they warned shareholders that the group was still experiencing difficult trading conditions. The acrimonious take-over battle over Kempthorne Prosser and Company, Ltd, [was amicably resolved during the week. The final reI suit appears to be that all [parties finish up getting | what they originally wanted, 'except at a higher price. New Zealand Farmers’ Fertiliser Company, Ltd, will have the pharmaceutical side of K.P.’s business, a 40 per cent interest in the South Island fertiliser works, and presumably the whole of the North Island works. Ravensdown will have 60

;per cent of the South Island works — which makes them co-operatives under the Act, with all the advantages that follow from this. K.P. shareholders receive more for their shares, and Brierley Investments are bound to make a lot of money — how much depends on the average price they paid and the interest charges on holding the shares. It could be anything between SIM and S2M; it was a typical situation in which Brierleys could not lose, although they must have been a little worried at times. A.B. Consolidated Holdings, Ltd, shocked with the announcement of a SI.7M loss. However, since most of the loss is the result of write-offs, we must wait to see what reconstruction is being planned before this can be evaluated. Once the board makes its formal recommendation on the bid from Moana Estates, we shall learn more. The rates offered by Canterbury Frozen Meat Company for its first public debenture issue confirm the trend in interest rates. They are very competitive, and the issue will no doubt be popular, especially in view of the security offered.