McKenzies profit below budget

Press, 21 June 1980, Page 19

McKenzies profit below budget

PA Wellington McKenzies (NZ), Ltd, did not achieve its budgeted I profit for the year ended February 29, but the management of L. D. Nathan and Company, Ltd, which acquired the company last year, is confident that advantages originally envisaged are materialising. Nathan’s chairman (Mr K. V. Coe) says this in the full interim report. As announced, the group’s unaudited profit for the six I months to January 31, ex-’ eluding, McKenzies’ but in-; eluding. W’oolworths’ results, rose 47.4 per cent to $2,635,000. Mr Coe says that at the time the profit was reported no indication of McKenzies’ performance for its financial year was available. It was expected that the delays and disruptions involved in the acquisition would have affected trading over what is traditionally; the best selling period of the; calendar year, October to December. “These anticipations have been confirmed in part by figures now available which, while showing that McKenzies’ budgeted annual

11 profit was not achieved none[jtheless clearly confirm the |! future benefits the acquisi- . ition will confer.” Mr Coe says that, because' [.of the changes in the group, . That have, taken place as a; /suit of the acquisition of; Woolworths, it is not really .! feasible to compare the latlest result with that for the 'same 1978-79 period. ;■! The enlarged group’s ■sales and profit budgets jiwere exceeded in the latest jperiod. Sales continued to be; ■ ’buoyant after balance date,! (though some sectors of thei market in which the com- > pany trades have recentlyshown a decline. Abysmal weather patterns in the “so-called summer months” took severe toll of soft drink sales in the 51 per cent-owned Oasis Industries. The “unnatural impact” of the Government’s sales tax also depressed demand and a i supplier’s delay in the delivery of crates disrupted the launch of a major new pack. Oasis’s six-month figures ; reflect all these factors with a substantial shortfall in both sales and profitability. Mr Coe says that, though I the late start to the merger

of McKenzies with Woolworths will preclude major economies from rationalisation emerging in this financial year, the substantial costs of the merger are now known and provided for in budgets.