M. O’Brien seeking better result

Press, 3 November 1981, Page 18

M. O’Brien seeking better result

The result that M. O’Brien and Company. Ltd. the Christchurch shoe manufacturer, earned in its latest financial year was not good enough, said the chairman, Mr G. W. Hunt, in the annual report. The pre-tax trading profit fell 37.1 per cent to $156,379, and after tax a group net profit of $103,948 (down 33.7 per cent) was left for paying dividends and retention in the business.

. The final figure represented an earning rate of 5.7 per cent on shareholders' funds and 13.9 per cent on the paidrup share capital. The achievements of the past two years had fallen below the desired level, Mr Hunt said. “The board is active and will not rest until the present re-organisation achieves ' a satisfactory return to shareholders.” Mr Hunt is critical of the

present high inflation rate and the Government's handling in matters of manufacturing. High inflation, which the Federation of Labour leadership and successive Governments had treated with "cynical contempt,”' continued to destroy savings and investments. If it continued much longer it would destroy the economy and t New Zealand’s way of life, he' said.“The running of a manufacturing business today is fraught with major problems created by inflation and Government tinkering, generating crises at board and managerial level, far beyond those experienced in past decades.” Mr Hunt was critical of the Government’s study on the footwear industry.' The Official report of the final draft of the . private industry study was released .in June, and the proposals

were not accepted by the company or the footwear industry. “We are trying to resolve the differences between the bureaucrats and the. industry iwitjj. jjfjje Minister of '■ Trade (Mr' AdamsSchneider). “The anachronism of a supposedly free enterprise Government heavily manipulating private industry and trade; distracts and weakens further planning and investment confidence,’’ he said.

Although the footwear industry was now showing signs of a recovery; it remained highly competitive. The number of manufacturers of athletic shoes had grown from four to 20 in the past five years.

There was concern that without growth and adequate profits, the industry might not deserve sufficient confidence to sustain the reinvestment required to keep up with developing world technology, Mr Hunt said. The net profit in the year to June 30 was after .providing $39,452 less for tax at $527431 (including deferred tax of 521,087), but $11,213 more for depreciation at $122,087. A recommended final dividend of 5c a share gives a steady annual rate of 7.5 c a share (15 per cent). The dividend requirement is $75,562 and it' is covered 1.1 times after allowing for the preference dividends. Shareholders’ funds rose $126,007 to $1,832,547, including share capital up $125,000 to $750,000 after the issue of 250,000 50c 15 per cent preference shares.

Working capital rose $178,312 to $1,119,060, and the current ratio improved from 1.6 to 2.1 to one.