Strong export drive by N.Z. Cement

Press, 23 April 1980, Page 27

Strong export drive by N.Z. Cement

A strong export drive by New Zealand Cement Holdings, Ltd, more than made up for the reduced local demand in cement sales, and export prospects for the rest of the financial year look bright, according to the directors in a, half-yearly report. The financial results in the six months to January 31 were adversely affected by unavoidable cost increases and reduced local demand, although export cement sales from the Westport works were a compensating factor, they said. “The company has been reluctant to raise cement prices because of the poor state of the building industry, but it has little choice in times of static or falling demand, and a price increase has just been granted by the pricing authorities.” The increase would be reflected in results in the final three months of the financial year to July 30.

I At the annual general 'meeting last November it was reported that New Zealand sales tonnage was lower than forecast, and this trend was still evident at the end of January. However, the company had maintained its market share, the directors sa?’.

“While sales held up well in a number of areas, there was a decline in places where demand had previously been relatively steady. Local usage of cement depends on the construction industry, which in turn, relies for its stimulus on an expanding economy.” Regrettably, the economic recovery in 1978-79 had lit.'3 Tect on the building industry, and public body capital expenditure, which generates considerable demand for cement, has been curtailed.

Prospects for improved profitability during the balance of this year were better, after the approval of the price increases, they said.

i The group net profit fell sharply in the latest six months, down from $597,000 |to $35,000, on cement sales which rise 7.8 per cent to 155,670 tonnes. - In spite of the reduced plant utilisation because of the building industry recession, the company is maintaining its policy of charging straight-line depreciation on revalued assets. The depreciation provision is $1,468,000, $583,000 more than that allowed for tax deduction purposes. The tax provision was up $112,000 to I $190,000, including deferred! tax of $105,000. There were also net realised and unrealised exchange losses of $398,000, compared with $327,000 in the previous corresponding period. A capital profit . of $126,000 on the sale of land has been realised since January 31. A steady interim dividend of 5c a share (5 per cent) is payable on Mav 16, ex dividend on April 29.