C.M.I. sees continuing difficult times

Press, 15 July 1980, Page 18

C.M.I. sees continuing difficult times

Business conditions will probably continue to be difficult, the chairman of Consolidated Metal Industries, Ltd (Mr H. M. Gray) says in his annual review.

. Although the longer term view for New Zealand may be encouraging, the company has to continue in the meantime to grapple with an uncertain building industry, while hoping that the rural sector will retain its strength. Mr Gray says that the company’s' figures for last year (profit 7.4 per cent higher to $1,59,906 and sales 12.4 per cent higher to $19,078,365) were . significantly affected by price increases.

In addition, especially in the second half, competitive forces generated an unwelcome incidence of price cutting. This reduced margins from normal levels. However, the company retained its full market share and is favourably placed for a return to more stable conditions.

Tliere was a further satisfying rise in exports over a wide range of products. Expansion in this area was not easy, and tliere were signs that it might become more difficult as countries such as Taiwan, Korea, and Hong Kong became more aggressive and price conscious in areas where

C.M.I. would normally hope to meet a good response, said Mr Gray Referring to the financial position, Mr Gray says this has been manageable, but for the use of some modest short-term bill finance, but he describes tax payments as “a real shock to the system,” and pleads for some relief in this area.

The accounts show that the result was after providing $36,655 more for depreciation at $326,866. and $15,186 more for tax at $944,049.

The 18 per cent dividend takes $548,935. covered 2.9 times by the profit. As announced, the company has proposed a one-for-10 bonus issue.

The earning rate on average shareholders’ funds declined from 14.2 to 13.3 per cent.