PacDunlop lifts profit 32 p.c.

Press, 24 September 1988, Page 36

PacDunlop lifts profit 32 p.c.

NZPA-AAP Melbourne Pacific Dunlop has kept up its'recent momentum with a 32 per cent rise in equity net profit to sAustlBs.9 million, and the company expects further strong growth. The increase gives it a 30.5 per cent compound annual earnings growth rate since 1980. Managing director, Mr Philip Brass, said that as the base got higher it was increasingly difficult to sustain percentage growth, and a 32 per cent jump next year would be “very ambitious.” “But I think we can sustain a rate of earnings increase that will be better than average,” he said. The first two months of this year had been particularly strong, helped by a booming housing sector which boosted performances in electrical products and foam and fibre divisions, Mr Brass said. Clothing, footwear and soft goods had picked up after a relatively weak patch early in the 1987-88 year. Best performers for the year to June 30 were the electrical products group, which contributed 29 per cent of operating profit, and consumer products, 22 per. cent. Ansell International, the world’s largest producer of latexdipped products, accounted for 15 per cent, matching growth in the battery division. Mr Brass said battery

sales were expected to reach sAustl billion a year within two or three years, and profit would reach the group target for all divisions of 10 per cent of sales. Performance would be helped by rationalisation in the United States after the purchase of GNB Batteries, strong sales of Pulsar batteries and by the new Switch battery, which uses Pulsar technology and is to be launched in the U.S. early next year. Pacific Dunlop’s 50 per cent owned South Pacific Tyres, a joint venture finalised in early 1987 with Goodyear International, accounted for 9 per cent of group profit. Mr Brass said Goodyear technology and Australian marketing strength helped offset increased competition from imports, particularly dumped tyres. But the company warned the Federal Government needed to set up anti-dumping procedures to prevent further erosion of Australian manufacturing capacity. The company wrote off $85.3 million in goodwill and $130.5 million in intangible assets of trademarks and patents to produce an extraordinary loss of $228.19 million on its acquisitions of GNB Batteries and Bonds Coats Patons. Pacific Dunlop has become the third major company, after North Broken Hill Holdings and Coles Myer, to win a one-

off exemption frbm new accounting standards requiring goodwill to be amortised over 20 years. It now holds 60 per cent of its latest target, medical technology company, Nucleus, Ltd. Its bid is now unconditional. Mr Brass said that by January next year Pacific Dunlop expected to have a five to 10 year strategic plan in place for Nucleus and its subsidiary Telectronics Holdings, Ltd, which would probably include widening the range of products it marketed. Pacific Dunlop said last week EIE Development, which is negotiating with" Ariadne Australia to buy its industrial subsidiary, Repco, and its property development at Sanctuary Cove, had agreed to sell Repco on to Pacific Dunlop if the sale went ahead. Mr Brass said the link with EIE had seemed the only way to get Ariadne to take an offer for Repco seriously. He was staying out of all talks and waiting to see what happened. He agreed the company was conservatively geared, with a ratio of 28 per cent of interest-bear-ing debt to equity. The group had the potential to spend a “substantial amount” if it chose to make further acquisitions, Mr Brass said, but was not interested in buying for the sake of it. Apart from Repco, there were no major targets in sight.