Donaghys starts year well

Press, 19 August 1981, Page 25

Donaghys starts year well

PA Dunedin Donaghys Industries, Ltd, increased sales 29 per cent in the first quarter, compared with the same period last year, and exports were 72 per cent ahead, said the chairman (Mr R. W. M. Greenslade) at the annual meeting. It would be difficult to forecast results yet for the year, but the profit was ahead of budget.

“Given a reasonable harvesting season — which, by the law of averages should be favourable — we would expect to achieve a profit increase greater than the increase of the year under review,” he said.

The modest profit increase of 6.3 per cent in 1981 was blamed on the worst haybaling season in more than a decade.

“Had we experienced such a drastic downturn in baler twine sales six or seven years ago we would almost certainly have been making losses and in addition, would have faced a critical liquid-

ity problem. “Fortunately, we have withstood the adverse season, but it has had its effects. “Our inventories are

higher than we would like and our current assets to liabilities ratio has deteriorated marginally," he said.

Production of baler twine at Waikuku had been curtailed. However, Mr Greenslade said the result does, if nothing else, vindicate the diversification policy initiated in the time of the previous chairman, Mr H. M. Parata.

“Without our spread of interests this would not have been a happy day for the board or shareholders." In the circumstances, the company had performed well, and this was reflected in the one per cent increase in dividend to 18 per cent. Apart from baler twine, Donaghys had many frustrations over the interpretation by Government officials of the I.D.C. plan for the textile and cordage industries. A great understanding had been achieved “but not without loss of profit opportunity."

Top management had spent an “inordinate amount of time” on preparing submissions at the cost of diversion from work on other projects. There had also been direct costs. “You will agree with me that air travel, hotel bills, and toll calls have increased at a rate in excess of the inflation rate,” Mr Greenslade said. "On the question of increases in travel and transportation costs it is pertinent to note that internal freight rates have risen out of all proportion and perhaps the Government might consider directing the Industries Development Commission's — or some other suitable body’s — attention to this complex problem, which is having such an adverse effect on South Island industry.” The managing director (Mr N. J. B. Craig) also referred to implementation of the I.D.C plan. Donaghys staff adopted a policy of grim

determination to obtain a satisfactory end. Turning to international trade, he said it was “arrant nonsense" to call New Zealand manufacturing industries inefficient and not meriting the support of the consumer.

Such allegations appeared to be motivated by self interest for imported goods. The adoption of import proposals would certainly result in many more New Zealanders being thrown on the unemployment heap, he said.

“Our aim is to be internationally competitive (whatever that may mean). If it means an ability to increase export performance then I believe we are now achieving that objective.”

The company could not compete with low’ labour cost countries which adopt export pricing policies which are in effect below material costs, he said.