C.P.D. cautious on current profits

Press, 12 August 1980, Page 22

C.P.D. cautious on current profits

The directors of Cable Price Downer, Ltd, have doubts about the current financial year and the company’s likely profitability. The chairman (Mr R. W. Steele) says in the latest annual report that "I am not prepared- to predict that in the current vear the group will match its performance of tlie past three or four years.” But he says “I believe that it will produce a satisfactory return on shareholders’ funds.”

Several areas of the Wel-lington-based engineering and construction group’s activities are faced with reduced demand, Mr Steele says.

“Except to the extent that they can sell their specialised skills overseas, our engineering and construction companies will be forced by the reduced demand for capital goods and services within New Zealand to; accept a lower level ofi activity than their current capacity is capable of supporting. There appears to I

bo little likelihood of this! .situation changing in thes immediate future and that until actual construe. tion commences on tne major energy production nrniects which are . orS in planning there is unlikely to be aS" great resurgence of demand in their principal I believe that our contracting conipanies will continue to trade profitably if at a lower.level than previously, and route well placed to take ad'antage of the upturn on contracting work when it even , for the . mer-l chandising companies are, “patchy" in some areas but, over all they, can be expected to give a good account. . The manufacturing companies are generally showing good forward work loads and their major problem will be to achieve the production necessary to satisfy demand. Mr Steele says that the 11 per cent increase in trading results was achieved 'despite real forebodings about, the short term future of the; local heavy construction and

engineering industries in which we are involved, and which in recent years have been the source of a significant proportion of our income.”

The shortage of suitable opportunities in New Zealand has encouraged ’the construction company Downer and Company, Ltd, to ■market its expertise overseas. '

Mr Steele says the heavy ;; engineering subsidiaries have i suffered from . the lack of ’ :l confidence in the industry 5 I and a consequent unwilling-d iness to make major capital . i investment decisions. i But this has been “more . 'than offset by a strong de-' ilmand and high levels of profitability elsewhere in the , ■ group. I' “Noteworthy examples., which spring readily to mind include the automotive diri-M sion, Cable Price Toyota, 1 which, dissatisfied with 5 merely maintaining its share-? iof a shrunken market, has actively promoted its prod--7 uct and has achieved record: sales in terms of the number; of units sold, frith ■ con-f. 'sequent enhanced profitabii-; lity.