AHI dividend up after profit fall

Press, 15 May 1981, Page 16

AHI dividend up after profit fall

Although difficult trading conditions and industrial stoppages resulted in a 7 per cent lower net profit for Alex Harvey Industries. Ltd, in the year to March 31, the company's directors are recommending an increase in dividend from 16 per cent to 18 per cent. They say that the $1,200,000 lower profit of $15,300,000 does not reflect the earning capacity of the company given normal trading conditions. They expect higher sales in real’terms in the current year, as economic conditions improve and contributions from new products and processes accrue.

As reported at the half way mark (interim profit was 12.9 per cent lower), trading in the domestic market suffered a severe and sudden downturn in real terms, particularly in the early months of the financial year.

Some increases in demand were experienced in the second half and trading results improved, although a further costly industrial stoppage prevented a full recovery.

Group sales for the year rose 8.3 per cent to $314 million — an increase which

directors say equates with market growth but falls short of the current inflation rate.

They’ say a drop in volume of seven per cent in real terms was the prime reason for the downturn in profit, although two major industrial stoppages were costly. In addition, a number of Significant one-time costs were incurred in items which should provide future benefits.

An example of these were the cornmissioning difficulties experienced with the new high speed line for making Decfabond roofing tile's. Lost production and sales during this period resulted in losses of about $1 million. Export continued to rise, adding 6.3 per cent to a f.o.b. (free on board) value of $48,700,000, despite the loss of refrigerated shipping container exports which amounted to $6,500,000 last year.

The directors say that the current year should see substantial contributions from developments such as the new Barmag five-layer film extruder, plant to make lightweight plastic bottles, PVC compounding equipment, facilities for making drainage pipe, and a new

film system for the export packing of lamb and sheep carcasses.

Significant cost savings should arise from developments such as the new electric furnace to replace oilfired equipment at Crown Crystal Glass, new can-mak-ing technology, and the elimination of unprofitable product lines.

They say that the Turoa Ski-field’s operating results were still below plan in 198081. but considerably improved on the previous year. A further marked improvement is expected. The group result was after a tax credit provision of $3,136,000 compared with a credit of $1,637,000 previously. Depreciation takes $1,182,000 more at $9,065,000 and the directors say stock and debtors were held steady. Capital expenditure was maintained at the $l7 million level of 1980.

A final dividend of 10 per cent is payable on July 31. The annual rate is equal to a 22.5 per cent on capital before last year’s one-for-four bonus. The full payout takes $7,327,890 and is covered by an earning rate on capital of 37.5 per cent (last year 40.6 per cent).