McKechnie sees improvement

Press, 10 November 1983, Page 23

McKechnie sees improvement

PA Wellington McKechnie Brothers NZ, Ltd, is expecting better trading conditions this year, but has doubts about the effects on profits because of the price freeze. The chairman, Mr G; D. McKechnie, said in his annual report that signs of improved demand should be tempered with caution because of the influence of the price freeze. This particularly related to aluminium. “Apart from the effect on operating margins generally, the price freeze has created distortions in the aluminium market,” he said. “This market is influenced by international price fluctuations and higher prices overseas have caused severe disruption to local

supplies. “The nature of this disruption is such as to interfere with free competition in our market with the consequent damage to our operating margins. “Unless this situation is resolved quickly the profitability of an important division will be unfairly impaired while we keep faith with our customers.” The report also calls for a quick decision on replacement of export incentives. Mr McKechnie said that the company spent $2.4 million on capital expenditure during the year, with increased capacity in the aluminium foundry and for manufacture of brass wire. Profit for the July 31 year was down 13 per cent to $3,329,000. The return on shareholders’ funds was 14 per cent (18 per cent) and the percentage of shareholders’ funds to total assets was 54.9 per cent (57.2 per cent).