Fletcher confident of growth

Press, 11 July 1979, Page 20

Fletcher confident of growth

Fletcher Holdings, Ltd, be--lieves that changes made in the pattern of its business will enable the group to continue to grow profitably, says its managing director (Mr J. C. Fletcher) in the latest annual report. One of the achievements of the year was the merging of Firth Industries, Ltd, and the Wellington-based aggregate and concrete block companies acquired by Fletcher in late 1978. Home-building declined by a further 22 per cent during the year, but the rate of decline in other construction was much less. However, these declines caused a further reduction in scale of 'some plants, and activities, which was begun in the previous year. Costs had been (reduced steadily, and this (was a major factor in the (improvement in operating (income, and in export sales.

The group remained committed to making further substantial gains in export business, but further declines in some main domestic markets, especially housing, were expected, the report says. The accumulation of work for Fletcher Development and Construction was up SI3M at SB3M, at March 31. Fletcher Projects International had its first significant success in the Middle East, with the sale of relocatable units in Saudi Arabia, for which export grants were obtained. Beazley Homes, Ltd, more than maintained its marketshare in the lower-cost end of the marke', but margins were eroded, and housebuilding showed a loss. “Our projections for 197980 anticipate a further drop to an annual level of 12,000 to 14,000 units, and we do

not expect a lift during the next three years,” says Mr Fletcher.

The group’s shopping centres division manages 19 retail outlets, with nearly 600 tenants producing annual turnover of more than SI2SM. Export log sales during the year increased to a level not experienced since 19678, and the total volume shipped exceeded 200,000 cubic metres. A further 1500 ha of forest was planted during the year, making 24,002 ha.

Fletcher Forests has a total land holding of 34,113 ha in selected areas.

As announced, the group’s net profit rose $1,479,000 or 9.7 per cent, to $16,730,000 in the year to March 31. The dividend rate is to be raised from 18 per cent to 20 per cent (20c a share) requiring $6,558,000. Turnover rose 9.3 per cent to 5398.0 M

Group exports were up $4.6M, or 29 per cent, at $20.5M. In addition the company, as agent, was responsible for the sale of $13.5M worth of New Zealand produce to the U.S.S.R.

Non-trading gains of $3,734,000 were made on sales of investments, and assets not part of the group's main activities, but these were more than offset by big write-downs in the book value of continuing assets where reduced market demand had made historical cost values unrealistic.

The net surplus after tax, was $109,000, compared with $198,000 in the previous year.

The total profit was after minority interests of $707,000 (up $24,000) and included a net trading profit of $14,639,000 (up $1,337,000, or 10 per cent) after tax $2,279,000 higher at $6,491,000. However, tax offsets on other items made for an over-all tax credit of $1,006,000, against a credit of $1,363,000 last year.

The provision for depre-, ciation was $785,000 higher at $5,942,000.

The earning rate on shareholders’ funds rose from

11.3 per cent to 11.5 per cent.

Shareholders’ funds increased $13,046,000 to $153,967,000, including ordinary capital increased $876,000 by the Firth takeover, and a staff issue to $33,246,000. The issue in February, raised $3,300,000 in preference capital.

Term liabilities were $6,942,000 higher at $70,716,000. Net current assets increased $5.4M to $50.8M, but the current ratio fell from 1.7 to 1.6 to 1.

At 235 c the ordinary shares had a dividend yield of 8.5 per cent and an earnings yield of 21.8 per cent. The price-earnings ratio was 4.6, and each share had a net asset-backing of 519 c.