Motor Holdings confident

Press, 7 August 1985, Page 34

Motor Holdings confident

Economic growth during 1985-86 is expected to be at a significantly slower rate than that experienced in 1984-85, says the chairman of Motor Holdings, Ltd, Mr Lloyd Brown, in his review with the company’s annual accounts. However, it is not expected that the downturn will revert to the levels experienced in 1981-82, Mr Brown says. New car registrations are expected to be 87,000 units for the year ending March, 1986, compared with 93,000 for the vear ended March, 1985. By way of comparison, new car sales for the March 1984 year were 77,000. Mr Brown says that the general tenor of economic forecasts for this financial year and the next is for a continuation of growth. “Most assessments would

appear to accept that a switch of resources to the external sector is expected, and that a decline in domestic expenditure will occur,” he says.

“It is recognised that there is little likelihood of growth in money supply, and that there will be a continuation of relatively high interest rates.” The group will continue to emphasise asset management and less cyclical earnings, he says. Reviewing the past year, Mr Brown says that the strong growth of the economy was reflected in increased demand for all products provided by the group — with a resultant increase in turnover and profit. Referring to the international economy, the chairman says that a major factor in the group’s product pricing is the relativity

of the New Zealand dollar to the yen. At the beginning of the financial year under review the rate was 149 yen to the dollar, the devaluation reduced the rate to 121 yen and since the floating of the currency it has dropped further. The devaluation caused a 25 per cent increase in the value of inventories and debtors, and was the most important single factor in the fall of the group’s equity rates to 42.7 per cent, from the planned 50 per cent. “During the year, contrary to the predictions of many analysts, the yen weakened from 225 to the U.S. dollar to about 260 yen. Expectations for the current year are that the yen will reverse this trend as a result of the relative strength of the Japanese economy,” Mr Brown says. During the year the group

reduced its total interest bill by $630,460 on the previous year — which in turn was a $728,949 reduction on the 1982-83 year. Mr Brown says that the outlook for interest rates in the current year is that they will remain at an unacceptably high level. The group uses a mix of on-shore and off-shore funds, and maintains a policy of maximising the relative attractiveness of low off-shore interest rates against the possibility of a devaluing N.Z. dollar. During the year Motor Holdings increased its shareholding in Mazda Motors of New Zealand, Ltd, from 24.84 to 44 per cent — thus becoming the largest single shareholder. In March the sale of the Otahuhu assembly plant to Mazda was completed as part of a major reconstruc-

tion of that company. The Subaru organisation has been consolidated and is now the group’s largest operating activity. Sales increased substantially during the year, says the managing director, Mr Peter Turner, in his review of operations. The Honda motor-cycle business achieved a quantum leap forward in market share during the year and achieved 50 per cent of New Zealand motor-cycle sales. Komatsu construction equipment sales improved to a record 140 units. Engineering and spare parts sales of Motor Holdings (Aviation) Ltd, rose 35 per cent, and flight training and charter operations increased 45 per cent. Aircraft sales trebled. As previously reported, net profit jumped from $1,820,022 to $4,822,136 in the year ended March 31;