‘Baltray slow to react’

Press, 19 July 1983, Page 23

‘Baltray slow to react’

Ballin Rattray, Ltd, had been too slow in adjusting to the present strong competition in liquor trading, said the chief executive, Mr C. T. A. Rattray, in the annual report. Commenting on the unsatisfactory result for the year, mainly because of the liquor division, Mr Rattray said that the group could not run a cut-price liquor activity on winch was imposed a costly, and somewhat inflexible, corporate structure. “We have allowed part of our market to erode because we did not react quickly enough. However, changes are being made and the significant effect of these should start to show through later in the year.” It was frustrating that it took so long to complete the negotiations with L. D. Nathan and Co., Ltd, to buy its half share in Allied Liquor Merchants, Ltd, Auckland, in return for Ballin’s interest in Southern

Bottlers, Ltd, Christchurch. Although the transaction was effective from April 1, 1982, it was not finalised until March, 1983, and therefore considerable costs had to be absorbed in two liquor activities — Allied Liquor Merchants and the company’s traditional structure — because no rationalising could be made, he said. The J. Rattray and Son, Ltd, grocery division had an acceptable return in difficult trading, but Fairbairn Wright, Ltd, had had to be trimmed because its profit was only just acceptable. “The price freeze, however essential it may be, adversely affected profitability in that it certainly eroded margins and the effect was greater than the wage freeze benefits,” Mr Rattray said. This applied particularly to the liquor division, with its high import content, and to some extent the other divisions. Being able to re-

cover only additional costs on a money value basis, and not on established percentage margin, in some instances cut gross profit more than 50 per cent. Although the sales of imported goods did not comprise a major part of the business, the volume was still significant. The total group net equity profit rose 4.5 per cent to $6,844,000 in the year to March 31, compared .with the previous corresponding period. The profit included equity profits down $179,000 to $85,000, and extraordinary profits of $3,816,000 ($2,606,000). If these are excluded, the profit is down 20 per cent at $2,943,000. Group turnover more than tripled, from $77,613,000 to $273,156,000, because of a merger with J. Rattray and Son, Ltd. A breakdown of turnover shows that grocery sales totalled $138.4M, liquor $109.6M, and other sectors,

$25.1M. A recommended final dividend of 5c a share gives an annual rate of 9c a share (9 per cent). The dividend requirement is $2,241,000, and it is covered 3.0 times by the profit after allowing for preference dividends. The profit was after providing $412,000 more for depreciation at $1,413,000, but $552,000 less for tax at $2,008,000. Shareholders’ funds rose $8,002,000 to $40,859,000, including ordinary capital up $3,593,000 to $12,452,000 after the issuing of shares for the merger with J. Rattray and Son. Working capital rose $8,136,000 to $11,944,000, and the current ratio was steady at 1.2 to one. Ordinary shareholders’ equity fell from 51.3 per cent to 39.2 per cent, and the net asset backing a 50c ordinary share eased from 173 c to 155 c.