Firestone concerned

Press, 29 January 1982, Page 8

Firestone concerned

Firestone N.Z. Ltd, needs a stable strike-free, factory environment to be cost competitive and a—lead from the Government on the future of the tyre industry, according to the chairman, (Mr R. L. Deal), in the annual report. “The 1982 year will be a critical one,” and decisions on further capital expenditure at the Papanui tyre factory would have to await the Industry Development Commission’s (IDC) final report on the New Zealand tyre industry and the Government decisions stemming from it, he said. The IDC study of the tyre industry was the focus of attention during the year. The commission made a thorough investigation of the industry and the draft report put forward some wide-rang-ing recommendations. “Firestone supports the continuation of full manufacturing capability in the industry, and in particular its own factory in Christchurch,” Mr Deal said. “We believe this will require protection by import

licensing. We do not accept that a tariff alone will provide an adequate replacement for licensing. “The uncertainly generated by the commission’s draft report, including the suggestion that over-capacity, could be overcome, by the closing of one of the three tyre factories in New Zealand, has left us in something of a trauma,” he said.

Employees too were left with considerable apprehension about the future, and local industries and businesses that benefited from the tyre industry’s activities were rightly concerned. ' “Firestone has modern tyre technology and the New Zealand-made Firestone tyre is of the highest quality by world standards.”

Modernising the tyre curing line of the Papanui factory began in 1980 and was expected to be working in 1982, he said. “However, technology and equipment alone is not enough. The company reported a 14 per cent increase in profit in the first half-

year, but finished the year 201 per cent less than last year. “The strike during the second-half brought a 45 per cent decline in profit on the same period last year,” Mr Deal said.

As reported the group net profit fell 20.3 per cent to $3,038,000 in the year to October 31, on sales 15 per cent higher at $61.3 million. The gross profit declined 9.6 per cent to SB.9M. The final profit was after providing $9OOO less for depreciation at $1,324,000, and $795,000 less for tax at $1,836,000. A recommended final dividend of 8c a share gives a steady annual rate of 15c a share (15 per cent), payable on February 18. The dividend requirement is $1,522,000 and it is covered 2.0 times by the profit.

Shareholders’ funds rose $1,516,000 to $17,785,000 including steady ordinary capital of SIO.IM.

Working capital fell $1,069,000 to $3,592,000 and the current ratio fell from 1.3 to 1.2 to one.