Signs of slowing in N.Z. economy

Press, 2 August 1985, Page 13

Signs of slowing in N.Z. economy

PA Wellington Ceramco, Ltd, will improve its results this year but its growth rate will not be as high as last year, the chairman, Mr John Fair, says in the company’s annual report The buoyant trading conditions in the year to March 31 continued into the first quarter of this year in most sectors of the company. “There are, however, some signs of a slowing in the New Zealand economy and present indications are that, although results for the year should show further improvement, the rate of growth will not be as high as that achieved for the last year,” Mr Fair says. Ceramco’s after-tax profit for the year to March 31 increased 52.5 per cent to a record $13,125,000, including $4,405,000 equity retained earnings from associated companies. The managing director, Mr Mike Smith, says in the annual report that improved perform-, ance was reflected in earnings

on shareholders’ funds — “at a more acceptable level” of 18.1 per cent (111 per cent) — and in earnings an ordinary share of 60c (39c). Associated companies had made a significant contribution to the result and continued to justify the value of these strategic investments, he says. At balance date equity investments totalled $32 million, or about 20 per cent of Ceramco’s total assets of $163 million. The major acquisition during the year had been the cash purchase of all the shares in an Australian wholesale-retail chain, Crosby Tiles, Pty, Ltd. “In the 1985-86 year Ceramco’s Australian operations, including Crosby, will achieve an annual turnover in excess of SNZBO million and will represent an investment in total assets of $NZ37.7 million.” Ceramco also bought another Australian wholesale distribution company, Stenal Pty, Ltd, but sold its United Kingdom bone china manufacturing and marketing subsidiary, Crown Lynn Ceramics (U.K.), Ltd. While the latter continued to offer potential, Mr Smith says

there were logistical problems running a company so far away. The funds released by the divestment would be better deployed closer to home. Mr Fair says the recently announced merger with Atlas Corporation was an important step in Ceramco’s strategy of increasing investment in what it considered high growth areas. “The recent performance of Atlas has been most satisfactory. Although a similar growth is unlikely in the current year, the merging of the Atlas interests with the company will lead to more growth opportunities for the combined group with a resultant beneficial effect on profit performance.” The Ceramco group’s pretax trading profit of $12,783,000 ($7,596,000) was earned on sales Of $191,866,000 ($167,868,000). The total dividend was lifted to 25c a share tax-free (21c), amounting to ,$5,335,000 and covered 2.4 times. Mr Fair says Ceramco will be able to pay tax-free dividends for another six months. However, further sources from which tax-free payments can be made under current legislation will become available from time to time.