Donaghys ahead

Press, 13 August 1980, Page 18

Donaghys ahead

PA Dunedin In spite of an uncertain economy, first quarter domestic sales for Donaghys Industries, Ltd, are in line with last year, and export sales are substantially ahead of last year, as well as this year’s budget, the company’s chairman (Mr R. W. M. Greenslade) told shareholders at the annual meeting. Mr Greenslade said, however, that it is difficult to forecast the current year’s results. “Your board and management will, of course, be aiming to improve on last year’s result, but. at this stage all that can be said is, time will tell,” he said. Shareholders approved the chairman’s proposal for a 10 cent final tax-free dividend, in which the one for six bonus issue will participate. It requires $382,000. Referring to this, Mr Greenslade said another $300,000 is available from tax-free sources and that further sums have been submitted to the Inland Revenue Department for approv“This matter should be

concluded over the next few months and it is hoped that next year’s dividend will be from tax-free sources,” he But Mr Greenslade said that some form of stock valuation adjustment was needed, as two years ago when inflation was running at a lower rate than the current 18 per cent. . One of the effects of inflation has been the reduction in current ratio from last year’s 3.7 to 1 to 2.5 to I, partly because of substantial capital expenditure on the new Christchurch textile plant. “Your board has given a great deal of consideration to what philosophy it should adopt for the foreseeable future,” he said. “Without question, we have opted to profitably increase our export volume. To be successful this does require a good base domestic market to achieve economies of scale, so that we remain internationally competitive; as we at present are (Asian producers excepted).” Mr, N. J. B. Craig, the managing director, said that the year had been a particularly difficult one because of

a development of vital consequence to the company. This was the Industries Development Commission’s inquiry into the cordage and bag industry which, because of its dominant position within the country, really meant into Donaghys Industries.

In both cordage and bag making, the company had been successful in convincing the IDC of its economic contribution to the country. So there should be a reasonable measure of protection and the company should not suffer major harm. But Mr Craig expressed concern that departmental officials may be misinterpreting new regulations, and the company had been forced to take issue to have the matters satisfactorily resolved. The industrial restructuring in the textile industry had brought misunderstanding in the market place, and some sectors which the company supplied were felt to have been delaying orders until things had settled down.