Allflex confident after tough year

Press, 28 July 1986, Page 32

Allflex confident after tough year

Allflex Holdings, Ltd, is confident of continuing profitable growth, in spite of having a difficult year to March 31, says the chairman and managing director, Mr Bill McPhail, in the company’s annual report. He says the restructuring of the company is now in place, and with distribution channels for the Allflex animal identification system in place, it would be possible to widen the company’s product range with little additional overhead cost.

He also says, however, that indications are that 1986-87 will be another difficult year for exporters.

The company’s manufacturing capability in France, the United States, Spain and Brazil was of growing importance “in relation to the economic climate within New Zealand.”

The merging of Vet Brand, Inc, activities in America with those of Allflex provide additional expansion possibilities, Mr McPhail says. Allflex is pursuing opportunities “by way of acquisition or agency” to expand the group. As previously reported, net group tax-paid earnings for the year were $2,890,000, compared with $6,602,000 the previous year.

The exchange rate for the New Zealand dollar resulted in a substantial loss on profit margins on exports. Another adverse factor during the year had been a fall in sales of Allflex’s insecticide animal tags (by several million units) because of pest resistance to pesticides used by Allflex customers.

“We are hopeful that a good proportion of this business will be recovered as new pesticide formulae emerge, but it is unlikely to be a quick or spectacular recovery,” Mr McPhail says. Mr lan Wilson, the group general manager of Allflex, says the key object of the re-organisation of the company has been the development of a multi-national group of trading and manufacturing companies.

He describes Allflex as "world leaders in animal identification.”

A year of trading in South America has been a “most satisfactory” introduction to the market, Mr Wilson says.

The initial thrust was through subcontracted manufacturing in Brazil. Allflex is now also manufacturing in Argentina,

and plans to manufacture in at least one other South American country. Allflex has set up its own manufacturing plant in Spain. In the United States, the acquisition of Vet Brand, the Allflex distributor in the western states, has increased Allflex’s control of the North American market, Mr Wilson says. The shareholding at May 28, 1986, was: Family interests of the late Mr J. R. Burford, 29.4 per cent; Leyland Capital, Ltd, 14.8 per cent; Unify Group, Ltd, 19.5 per cent; Mr J. W. B. Wackrow, and Wackrow Family Trust, 4.7 per cent; ANZ Nominees, Ltd, 5.9 per cent; others, 25.7 per cent. Sales and royalty income for the year was $41,680,000 (previous year: $33,588,000). The working capital ratio has fallen from 2:57:1 to 2:02:1.

Earnings on shareholders funds were 15.5 per cent at March 31, 1986, compared with 38.1 per cent a year earlier; earnings on tangible assets were 6.8 per cent compared with 20.9 per cent.

At the annual meeting in Wellington on Thursday, August 14, shareholders will vote on a dividend re-investment plan, increasing the authorised capital to SSOM, and an employee share scheme.