Revertex down in first half

Press, 24 August 1988, Page 38

Revertex down in first half

Revertex Industries (N.Z.), the resins and chemicals manufacturer, yesterday reported a 19.1 per cent drop in unaudited total profits to $BlO,OOO in the six months ended June 30.

The final profit figure included extraordinary income of $319,000 (nil previously) from reduced deferred tax liability as well as income from a terminated life policy. If this figure is excluded, then the group net trading profit is down 50.9% to $491,000.

Commenting on the group’s trading, the chairman, Mr Bill Campbell, said the integration of Titan Chemicals has been completed during the six months. The improved efficiencies from this integration, together with the volume and technology gains from the purchase of Giant Polymer’s business, would make a contribution in the difficult months ahead. Revertex expected a better trading result in the second half of 1988 because a lower New Zealand dollar, improved returns from overseas businesses, reduced overheads, and improved New Zealand demand (as the coatings industry completed its stock reduction

programme), he said.. However, there were few signs of any improvement before the end of the year in the economic factors depressing the industry related to Revertex. “Building on the group’s export base would be a major thrust during the remainder of the year,” Mr Campbell. said. As well as a reduction in deferred tax liability because of a lower company tax rate, trading had been assisted by reduced tax rates in both Australia and New Zealand, which had dropped the interim tax commitment from $961,000 to $179,000. Revertex’s New Zealand activities had been significantly reduced in the latest six months because of rapidly escalating costs of imported raw materials, low demand within New Zealand, pricing competition from imports enjoying reduced tariffs, and a strong New Zealand dollar. ' A strong export performance in volume terms had been reduced in value by the strong dollar. Bad debts of $126,000, compared with none of the same period last year, had adversely affected profits and were an indication of the changed

New Zealand business scene. Turnover rose 3.8% to $25,967,000, but after expenses, the pre-tax trading profit fell 43.7% to $1,482,000. Depreciation rose $5OOO to $608,000, but tax took $782,000 less at $179,000. Interest charges increased $134,000 to $204,000. A steady interim dividend of 3.75 c a share (7.5%) has been declared, payable on September 22. The directors said that although the interim was the same as last year’s, the capital required to pay it had been increased by shares issued under the company’s share investment plan. Payment would absorb $473,000 ($453,000). An imputation tax credit would apply to the dividend, providing the proposed legislation was passed. The company had decided to change its balance date from December 31 to June 30 to coincide with that of its parent company, Monsanto Australia (65%). Revertex intends applying to the registrar of companies for an extension of the period within which the 1989 annual meeting must be held.