Brewers 'ripped-off’ says Lion head

Press, 30 August 1984, Page 26

Brewers 'ripped-off’ says Lion head

PA Wellington Lion Breweries’, managing director, Mr A. D. Myers, claimed yesterday Government taxation policies had “ripped off’ the brewing industry for the last 10 years. “Successive Governments have covered their lack of financial responsibility by creaming off legitimate and necessary profits from our industry without any regard to the impact that inadequate profit levels will have on our operations,” Mr Myers told Lion’s annual meeting- • He said Lion face major problems in its beer division, where current preinterest pre-tax returns on funds invested, in the order of 10.5 per cent, were totally inadequate. The greater part of the poor performance lay within the control of Government, he said.

“What you have seen and heard today and in the media over recent months is that over the" past 10 years brewing has gone from the most to the least profitable part of our business.

"Margins have been seriously eroded and the magnitude of tax increases has suppressed volume.” Mr Myers said it was up to the Government to decide if it wanted two vigorous, independent brewing companies offering varied products and playing their role to strengthen the economy. “We cannot continue to play our part in the national economy unless margins are signficantly improved whilst tax levels are held, until an acceptable balance between them is struck and maintained.”

Looking at the company’s trading performance in the last financial year, Mr Myers said the 15.3 per cent improvement on trading profit to $18.45 million was adequate.

There was also a minor improvement in ‘the tax paid return on shareholders’ funds from 7.1 per cent to 8.1 per cent.

On a brighter note, Mr Myers said NZ Wines and Spirits, Ltd, was going from strength to strength and prospects for the 1984-85 year were excellent.

The chairman, Sir Gordon Tait, said the Lion’s group turnover for the four months since March had increased 9.8 per cent. “As always, there are several unknowns in making a prediction for the remainder of the year, but at this stage we expect the increase in the group trading profit after tax to at least equal last year’s percentage increase,” he said.

Sir Gordon said the restructuring of the company was now complete. In addition, the new building at East Tamaki alongside NZ Wines and Spirits was nearing completion. “Early next year the corporate office and the headquarters of the brewing, hotels, and wines and spirits divisions will be co-located,” he said. Lion would retain a considerable presence in Wellington but regarded a presence throughout New Zealand as essential to its role as a national company. The meeting also saw a 30 minute film produced by the company outlining its policies and products. The film will be shown around the country.