Healing cycles to profit

Press, 16 June 1979, Page 19

Healing cycles to profit

By NEVIN TOPP Predictions that the price of petrol could be as high as $5 a gallon by the end of the year, and the approach of earless days, all mean [that more interest is being shown in the bicycle as an I alternative form of transport. This interest is reflected in the rising share price of Healing Industries, Ltd, which with Morrison Industries, Ltd, a subsidiary of Challenge Corporation, Ltd, supplies most of the bicycles in New Zealand. For example, at the beginning of this year Healing shares were selling at 270 c, but the price for the shares has recently been as high as 345 c with the prospect of a one-for-10 bonus issue. Thus there has been a lot of speculation in the NewZealand sharemarket about how well Healing Industries would do. Some indication was given in the interim report of the company last year when bicycle production was increased 50 per cent. The chairman of Healing Industries (Mr H. A. Christensen) said that the company had increased production 100 per cent in the|

year to March 31 on the previous corresponding period, and had the ability to expand production even further in the present financial year. As reported, the company increased unaudited group net profit 49.4 per cent to $1,077,000, and, as well as announcing the bonus issue, raised its annual dividend rate from 16c a share to 17.5 c a share (17.5 per cent) which at least partly fulfilled the speculators’ hopes.

Mr Christensen seemed happy with the company’s ability to cope with the demand in bicycles in New Zealand. Asked whether costs were increasing because of expanding production, he replied that the company had managed to hold its prices on bicycles for more than a year. The reasons for this were the more efficient manufacture of bicycles, model changes, and improvements in components achieved by investment in extra plant and machinery. Mr Christensen took the increasing price in petrol and the prospect of earless days calmly in the face of its effect on bicycle sales. He was not prepared to say definitely what effect the prospect of earless days would have on the demand

(for cycles, but he said that las petrol became dearer and more scarce, people would become more aware of the bicycle as an alternative form of transport. However, he had some controversial points to make about local bodies and the Government providing more incentives for cyclists as a way of helping in the energy crisis, particularly based on his recent visit to the Netherlands and Japan. Local bodies and the; Government should be providing cycleways or marked lanes for cyclists such as those found in the Netherlands, Germany, Britain, and California, Mr Christensen said.

The Government was still catering for the one man-one car philosophy in New Zealand. “One way of changing that would be to ban all cars from parking in the central city streets and use the empty parking spaces as cycle lanes,’’ Mr Christensen said. Fifty years ago, Mr Christensen was stopped by a police constable for riding his bicycle on the footpath in New Brighton. Now, however, he sees the law about cyclists not using the footpath as outdated.

“The footpath is almost unused for what it was designed for, and if ramps were built on the kerbs to the road, bicycles could use I the pavements and still leave j room for the pedestrians, j “In Japan, for example, even mopeds use the pavement,” he said. But it is all not a bed of roses at Healing. The company is at present running two shifts in an ■ effort to fulfil the demand for 10-speed bicycles, but has ample stocks of models such as dragsters. But Mr Christensen sees no trouble in selling these. Also, efforts to start a night shift working have proved to be difficult, because people do not want to work at night. Mr Christensen said that like the car-assembly plants, Healing was finding it difficult to get people to work a 40-hour week. There was a lot of absenteeism on Mondays and Fridays. The sales tax on boats may affect Epiglass marine coatings, made by a subsidiary of Healing Industries, and this may dampen the over-all profitability of the company.

I Outside competition is [also another factor. i Mr Christensen would not ; name any of the companies, but he said that he knew that some persons were attempting to import 10,000 cycles from an Asian country. “These people are only stirring up trouble. Local manufacturers can meet the demand,” Mr Christensen said.