L.W.R. views future with caution

Press, 25 September 1980, Page 22

L.W.R. views future with caution

The sales of Lane Walker Rudkin Industries, Ltd, are well ahead of the corresponding period last year, and forward orders are generally good, according to the chairman (Mr N. H. Rudkin) in the annual report. The immediate outlook for consumer spending was not encouraging and many of the group’s major customers were experiencing difficulties because of the present economy.

The liquidity difficulties caused by inflation remain unchanged, but the management were more efficient in coping with this, he said.

“In these circumstances, the directors are hopeful of at least maintaining profits and dividends in the current year. “The directors believe that competition from imports will not reach the level recommended by the Industries Development Commission. We also believe that our industry will maintain exports to Australia in spite of the recent breakdown in the NAFTA talks.” There would be increased competition from imports, but the main influence on profits would be on the buoyancy — or otherwise — of the local market, Mr Rudkin said.

Moves by the Government to boost the economy tould be expected in 1981, and this should restore consumer confidence, and the directors therefore viewed the future with reasonable assurance.

Capital expenditure commitments for the year were $1,197,000, compared with $1,418,000 previously. The cash flow continued to be tight, but had improved significantly from that experienced some months ago. Export sales of apparel doubled during the : year to $3.6 million, the bulk of the sales going to Australia and

the United States. Subject to the control of costs in New Zealand exports should continue to grow, Mr Rudkin said. In addition, the exports of Mathias LWR, Ltd, was worth more than SI3M, mainly from meat and fish. Mathias LWR, which is 51 per cent-owned by Lane Walker Rudkin, opened offices in Saudi Arabia and Melbourne during the year under review, and the company had good reason to look forward to continued growth in exports, he said. As reported, the group net profit rose 31.8 per cent to $2,641,000 in the year to June 19, bn sales 16.8 per cent higher at $57.1M, before extraordinary deductions of $5,717,000. The deductions include SSM for the reconstruction reserve and $883,000 for goodwill written off.

The profit was after providing $167,000 more for tax at $875,000, and $54,000 more for depreciation at $990,000.

A recommended final dividend of 4.5 c a share gives an unchanged annual rate of 8c a share (16 per cent). The dividend rate absorbs $804,000, and is covered 3.1 times by the profit before the extraordinary deductions, and after allowing for the preference dividend. Shareholders’ funds rose $2,469,000 to $26,793,000, including steady paid-up capital of $6,081,000. Working capital fell $1,884,000 to $15,903,000, and' the current ratio declined from 2.8 to 1.9 to one, the first time it has fallen below 2.8 since 1976. The main reason for the fall in working capital is an increase of $3,264,000 to $6,365,000 in a secured bank overdraft, and $3,185,000 in unsecured commercial bills, compared with none previously.