EMCO lifts profit 25 per cent

Press, 18 May 1984, Page 8

EMCO lifts profit 25 per cent

Improved housekeeping enabled EMCO Group, Ltd, to increase tax-paid trading profit for the year ended March 31 by 25.3 per cent, in spite of only a modest increase in sales of only about 5.9 per cent. The chairman, Mr L. M. Papps, said: “This marked increase in profit was made in a year when sales for the group as a whole increased only six per cent. The profit increase arose substantially within existing operations as well as an incremental benefit from a full year of Healing operations. The EMCO Group has made significant progress towards its major objective of improving returns on its investments.” After inclusion of extraordinary items — sales of assets $697,000 minus plant closure costs of $69,000 — profit improved 42.6 per cent to $10.9 million.

The provision for taxation rose $685,000 — or 13 per cent — to $5.9 million.

The directors recommended a final dividend of 12 per cent, of which a quarter would be tax-free. The total dividend for the

year is 17 per cent, of which three percentage points is tax-free. Taking into account the March, 1984. one-for-five bonus issue, the final dividend has been effectively increased by 20 per cent. Mr Papps said that the board was very pleased with the over-all result.

“To gain a 25 per cent increase in after-tax trading profit in the face of no real increase in sales, prices pegged by the freeze, and margins eroded by irrecoverable increases in costs, is a notable achievement,” he said.

Group Rentals maintained market leadership for the rental of colour televisions, and has made a substantial impact on the video market. Compared with two years ago when the company was purely a TV rental operation, its range of products and services have grown much broader.

NZMC had a good year, though the new-car market declined 7.1 per cent to 76,092 units. For the 1983 calendar year it was market leader in the key under--1900 cu cm class.

Healing experienced a very high level of activity with increased sales and the acquisition of two major companies, Lawrence, Smith and Canning, Ltd, of Sydney, a metal protection chemicals manufacturing company. and British Imperial Paints, Ltd, a New Zealand manufacturer of home and decorative paints. However, the Healing result was not quite up to expectation. The company was severely affected by the price freeze and cost's were incurred in absorbing recent acquisitions and in the company’s consequent reorganisation into three main divisions — paints, cycles and chemicals.

“After the reorganisation, Healing is now emerging as a much stronger force in the marketplace, with excellent profitability and growth prospects,” Mr Papps said. To enable EMCO to concentrate on its mainstream activities, the business of Sheetmetals has been sold, and Hawke Coachwork, Ltd, merged with New Zealand Motor Bodies, Ltd, EMCO taking a one-third interest in the merged company.