I.H. expects better demand in 1982

Press, 19 December 1981, Page 21

I.H. expects better demand in 1982

The major developments in energy projects would increase the demand for construction machinery, said the chairman of the International Harvester Company of New Zealand, Ltd, Mr A. J. Dewar, in the annual report.

The essential industries of farming, forestry, and road transport, would also continue to demand supplies of equipment from the company's product lines. “The best range of equipment offered, and its market acceptance both point to a continued strong performance in 1982 and beyond.” ■ The debt restructuring of the United States’ parent company had not affected the New Zealand activities.

“The parent company’s rationalisation will strengthen its back-up to the New Zealand operation, which is a viable economic unit in itself,” Mr Dewar said.

Real sales growth was apparent in the year to October 31, and total sales increased 20.3 per cent to $56.8 million.

The truck market remained static, but the increased share for the group

provided a material increase in the profit, he said. Profitability was also increased because of the change to importing and assembling mainly knocked down truck units, which involved assembling the trucks in the country of origin and then stripping them for export. Reassembly in New Zealand was quicker and more efficient than the completely knocked down method previously used.

The sales of construction equipment was steady in real terms, but improvements would show in 1982, Mr Dewar said. The local manufacture of rubber-tyred loaders would be increased to meet the market demand for major energy developments, and the growth prospects in the forest industry indicated a substantial market increase in the medium term. The tractor market remained depressed, but there was potential in 1982 for strong growth through the sale of four-wheel drive tractors.

The range offered would be the largest on the New Zealand market, Mr Dewar said.

The costs of borrowings for the International Harvester Credit Company of New Zealand, Ltd, continued to increase, reflecting the strong competition for funds throughout the year, particularly from Government quarters.

“The directors view the recent increased competition for private investment funds from Goverment with concern, particularly the stated intention to restrict the finance industry’s activity,” he said.

The group net equity profit rose 25.8 per cent to $2,311,000 including a 24.8 per cent increase in profits to $815,000 from the finance subsidiary.

Depreciation rose $2OOO to $128,000 and the tax provision required $523,000 more at $1,222,000.

Total equity capital increased $3,711,000 to $18,989,000, including common stock up SI.4M to $7.7M after a bonus issue during the year.

Working capital rose SI.6M to $15.5M, and the current ratio improved from 1.6 to 1.7 to one.