N.Z. Cement expects steady result

Press, 1 November 1984, Page 26

N.Z. Cement expects steady result

Prospects for 1985 are uncertain, says the managing director of New Zealand Cement Holdings, Ltd, Mr Wilson, in his review with the company’s annual accounts for the year ended July 31. “The surge in economic growth which took place in the first half of 1984 is expected to taper off,” he says. “Housing permits may reduce slightly on 1984, but this depends on Government policies which will be better known after the Budget.” "Other fixed capital investment is expected to be at levels similar to 1984, and over-all cement consumption should also be much the same as the year just past. Mr Wilson says that until the results of cement industry restructuring plans are known, little change is expected in present marketing and production patterns. “Meantime, the company is in an excellent position to

develop both domestic and export operations on a profitable basis.” Reviewing the year’s operations, Mr Wilson says that low inflation, a good demand from an expanded market base and controls on wages, prices, and interest rates all helped the company to its record result for the year. Sales increased $l4 million to $70.5 million after ' a 7.5 per cent rise in domestic market share. The company’s cement sales in New Zealand rose from 306,000 tonnes to 381,000 tonnes, and exports were marginally higher at 129,000 tonnes. The substantial increase in sales came mainly from North Island areas, with the company’s new depots in Wellington, Palmerston North, and Rotorua making excellent gains. Higher sales were also recorded in Hamilton, and sales in Canterbury increased 25 per cent. The Westport works oper-

ated at record levels throughout the year. Major capital expenditure included a new cement silo at Westport Wharf, and a new $4 million limestone crusher in the Cape Foulwind quarry. The Burnside works output was close to that of the previous year. Increased use of lignite coals brought significant cost savings, and the company intends to mine its own coal deposits in the coming year. Kiln dust modulising capacity has been increased, and all production of this by-product will be sold as fertiliser. Sales of lime products rose 11.7 per cent, after the 1983 drought which depressed sales the previous year. Work on the Oamaru project has been completed to the stage where it can be activated quickly when marketing and financial conditions are suitable.

Mr Wilson says that the

need for a cost-effective cement works is as great as ever, but that it will not be possible to proceed until the economic outlook improves. As previously reported, group trading profit after tax jumped from $981,000 to almost $4.0 million, after export tax credits of $1.2 million and a tax provision of $317,000 compared with $529,000 the previous year. The unchanged 12.5 per cent dividend is covered 1.8 times by the trading profit The earning rate on average shareholders’ funds is 7.6 per cent; net asset backing (fully diluted) is $2.62. The major changes in the balance sheet are a $12.4 million increase in cash to $13.5 million, an increase in fixed assets of $6.0 million to $6.4 million — balanced by the disappearance of the item “investments” (last year $11.2 million) and an increase in term loans of $9.9 million.