E. Adams builds Aust, exports

Press, 25 July 1984, Page 29

E. Adams builds Aust, exports

The Christchurch-based cake maker, Ernest Adams, Ltd, was very well placed to achieve a' result this year comparable with last year, the annual meeting was told yesterday. The general manager, Mr D. H. Booth, said Ernest Adams had achieved a satisfactory result for the first three months to June 30. In the year to March 31, the company raised net profit 5 per cent to $638,588 in a period when selling prices were frozen and some cost increases had to be absorbed. The company’s chairman, Mr H. A. Adams, said trading so far this year had continued at a high level, enabling a programme of upgrading plant to continue. “One important effect of this expenditure is to make it possible for us to broaden the base of this company by replacing ageing machinery with modem machinery capable of producing a much wider range of goods,” he said. Mr Adams said sales in Australia so far this year were about double the figure they were last year. “With the devaluation of the New Zealand currency our goods are very competitively priced now and. their quality is more and more being appreciated. "Other imported items will, of course, rise in price but we already have in stock the bulk of our dried fruit requirements for the year and good stocks of many other imported items. “In the long term, devaluation must add to the cost of producing our goods

to some extent, but it also must improve our competitiveness in the export field,” Mr . Adams said. The establishment of an Australian marketing subsidiary in Sydney was a very positive step forward, Mr Adams said. “I have every reason to feel confident that our export business will very soon be a really significant part of our total business.” He did not expect the devaluation to have any very adverse effects on Ernest Adams. An expected jump in the oil price would affect only the Christchurch bakery and the company was about to install there a large electric oven and was considering the conversion of its existing oil-fired ovens to liquefied petroleum gas. Ernest Adams now produced “the greater part” of the special cake and sponge flours needed in Archer’s Flour Mill, in which it had a 20 per cent holding. The mill also produced all the special pastry and other flours used in the Christchurch bakery. “We are preparing for a considerable expansion in our pastry production and it is most important that we have a secure supply of suitable flour for this purpose,” Mr Adams said. The meeting approved a one-for-five bonus share issue, and an increase of the company’s authorised capital to $2.5 million. Mr Booth said the increase would provide “elbow room” for the bonus issue and for the possible purchase of assets in future. The board had no intention of making any such pur-

chase at present In response to a question from a shareholder, Mr Booth said the board had earlier this year considered splitting the company’s $1 shares into 50c units, but had decided instead on the bonus issue.

“Perhaps a share split could be considered again at a later date,” he told the meeting. Another shareholder asked if the company had considered the opening of another shop after the closure of its last one in Christchurch.

Mr Adams said the shop had been closed reluctantly after many years of declining sales. The company’s retailing of its products had been competing with its wholesale selling.