Dalhoff and King concern over stock levels

Press, 26 November 1981, Page 21

Dalhoff and King concern over stock levels

PA Wellington Dalhoff and King Holdings, Ltd. will be trying to keep stocks to a minimum in a bid to counter the effects of high inflation and interest rates, the chairman (Mr A. G. Robb) says. He told shareholders in Wellington that the directors did not expect the 1981-82 year to be easy. "With the experience of the past year behind us, and the benefits of restructuring soon to emerge, a constant close review of all aspects of the company’s business will still need to be maintained to ensure a return to an acceptable rate of profitability.”

Mr Robb said a determined effort had been mounted to recover the situation.

Dalhoff's $293,000 operating loss ($600,000 profit last year) was mainly because of high interest costs, Mr Robb said — $3,279,000 for the 15 months to June 30, compared

with $1,702,000 for the previous year. Sales for the first four months of this year, $12,316,000 were slightly below budget but ahead of the 1980 figures which included aviation sales.

“Increased prices and the effect of unfavourable exchange movements on the landed cost of imported equipment have almost replaced the dollar value of lost aviation sales.”

Mr Robb said the company had not anticipated the full extent of the slow down in aircraft sales, which was made worse when the Dunedin operation was put out of action for several months by the Taieri floods. Inventory levels reached an all-time high. “As the serious loss of profitability became apparent, further moves to restructure the company’s operations were examined. “The sale of the lands and forests at $l.l million re-

leased $783,000 into our cash flow, after taxes on the forests sale. The realisation of the aviation companies’ shares will similarly release some $4 million this year. The resulting decrease in our borrowing costs will make our remaining operation much more viable.

“Although the sale of these aviation subsidiaries resulted in a book loss of $161,000 to the group, it realised $832,000 from revenue reserves to capital profit for tax purposes which will be available for tax-free distribution to shareholders. Mr Robb said the sale of the investments had improved the company’s equity ratio to 28 per cent." It was 24

per cent last year, and 35 per cent in 1977. Investment in higher yielding activities, and reducing inventories and debts should further improve the figure. Mr Robb said the company warmly welcomed Scott Group's participation, and said their trading expertise was already proving valuable.

A shareholder, Mr M. S. Pitt (in response to a ques-, tion) was told that there was' sufficient tax-free reserve for three dividends. He was also told the asset value of shares had not changed significantly, and the asset backing had altered because company liabilities had been reduced.