Abcal export success

Press, 16 April 1980, Page 25

Abcal export success

As a company, Associated British Cables, Ltd, must accept "that we enter the next decade . . . with the certain prospects of two further years of virtually nil domestic growth,” the chairman (Mr A. S. Don) says in his review of the annual accounts for the year ended December 31. Mr Don says that Abcal is well equipped to play its part in the major development of the New Zealand economy which is expected in the mid 1980 s, but in the meantime the defensive strategies adopted last year will be continued. Exports provide a major growth opportunity, and the company, which previously manufactured almost exclusively for the domestic market, is achieving substantial success in an export drive. Exports to the South Pacific, of predominantly building wire products, increased 64 per cent to almost $500,000 in the year to December 31.

However, the company is now looking further afield, and in the first quarter of 1980 firm orders already received exceed the total value of all exports for 1979, Mr Don says. "These include new business in the supply of substantial tonnages of PVC compound to the Middle East and Pakistan which, we

have hopes, will develop into regular business. “In addition there are prospects for the supply of general wiring products and mains cables to the Far East and Middle East. "The latest year was a very difficult one with operations severely hampered by industrial problems, particularly in the transport sectors, both at home and abroad. "However, in spite of severely restricted trading conditions in the building and construction industry the demand for building wires held up surprisingly well, largely because of the trend towards rewiring existing house installations. “In contrast, an almost total standstill in property development brought a sharp drop in the demand for heavy underground cable, and in turn in production. “A 17 per cent increase in volume output at the general wiring factories in Christchurch and Auckland cushioned a 40 per cent fall in mains cable production. The 17 per cent increase in volume output could also be attributed to the introduction of new lines and greater penetration of existing markets in such fields as the electronic, appliance and automotive industries, Mr Don says. i Prices had to be adjusted I three times during the year. I As a result of higher prices on the London Metal Ex-| change and the hardening of!

sterling the cost of copper rod into store rose from under $l5OO a tonne to more than $2300 at year end. Similarly, . PVC resin jumped from $6OO to more than $lOOO a tonne.

> "The recessionary effects s on the mains cables division ; were much more severe than - had been expected and sales , fell substantially . below budget. f Power authority require- > ments for the high voltage j underground mains cables » dropped dramatically and ; for one major area all outstanding orders j were at first deferred at the , request of the customer and ’ then cancelled. t In spite of this the opera- , tion remained profitable. As announced, Abcal , actually managed to increase profit slightly, $13,250 to $1,172,902, after providing $97,545 less for taxation at J $804,987 and $19,359 more 1 for depreciation at $560,943. ( The unchanged 20 per cent dividend takes $750,000 — covered 1.6 times by the k profit; the earning rate on ! shareholders’ funds is 12.1 per cent. Working caoital increased from $3,240,000 to $3,701,000; the current ratio rose from 2.1 to 2.4:1. Shareholders’ equity irni proVed from 70 to 73 per I cent: the shareholders’ funds lof $9,654,622 are comprised lof 63,750,000 capital; $318,358 (capital reserves,- and $5.6M i revenue reserves.