Expanded Ceramco group ahead 20 per cent

Press, 28 November 1979, Page 24

Expanded Ceramco group ahead 20 per cent

Ceramco. Ltd, increased net profit 20.2 per cent to $1,962,000 in the six months to September 30. ’To equalise dividend payi ments the interim rate has ! been raised from 5 per cent i to 7 per cent (7c a share) ' payable on December 14. ; The dividend for the last full •.year was raised from 14 per 'cent to 16 per cent. The current tightening in liquidity, coupled with rising interest rates, and inflation, indicate that trading conditions in New Zealand during [the next 6 months could be I more difficult, says the [chairman (Mr J. C. Fair). [ The effect of continuing inflation on the value of stocks warrants further consideration by the Government; reintroduction of the stock valuation adjustment for tax purposes would provide necessary and justifiable relief in this area, he I says.

Despite the uncertain economic outlook, the directors expect that the company’s historic pattern of earning higher profits in the second 6 months, because of the seasonal nature of some of its major activities, will continue and l that the results for the full year will reflect reasonable growth.

Lower demand for new capital equipment has presented some difficulties to the group’s light and heavy engineering com? panics. Planned improvements in profitability have not yet materialised in this area, but a recovery is now becoming evident.

With the merging of the Tappenden activities nearing completion, greater benefits are expected to accrue to the engineering group in the second 6 months of the financial year. Sales in the latest halfyear were 28.9 per cent higher at $49.2M. The directors say that demand in the company’s traditional market areas has remained steady, and the higher sales largely reflects the inclusion of the results of the Tappenden engineering and abrasives companies.

Ceramics showed satisfactory results in both New Zealand and overseas markets, and sales in the distribution and services group were in line with the previous six months. A good profit was achieved overseas. the directors say. The profit includes a capital gain of $192,000 from exchange movements. It does not include, however, an extraordinary gain of $130,000 resulted from exchange movements relating to capital investments in overseas subsidiaries.

The profit was after tax $135,000 lower at $431,000. The directors have also decided to introduce a shareholders’ concessional purchasing scheme to mark the company’s 50th Anniversary. This scheme will continue until December 1980. It provides for a 10 per cent discount on cash purchases from nominated outlets.