PDL in strong recovery

Press, 8 December 1988, Page 25

PDL in strong recovery

PDL Holdings, the Christchurch-based electrical manufacturing group, has recovered strongly in its latest six months, after reporting a $1.7 million loss in the year ended March 31. The company yesterday announced an unaudited total profit of $2.704M for the six months ended September 30, its second highest interim result and has declared an interim dividend of 7.5 c a share (30 per cent). The dividend, payable on January 27, is the first to have been declared by the company since the final payment for the year ended March 31, 1987. No interim dividend was paid in the corresponding period last year and an interim payment of 4.25 c a share was made in 1986.

The passing of the previous interim dividend in the previous corresponding period was the result of the company announcing a total loss of $255,000.

The highest interim net profit achieved by PDL was 53.247 M in 1985. Announcing the result yesterday, PDL’s managing director, Mr Don Sollitt, had further good news for shareholders, stating that both October and November had been strong months for the company. He added that he believed that the turnaround was “sustainable” in spite of the negative growth in the New Zealand economy.

Three reasons given for the half-yearly turnaround were cost control, new product development, and the transfer of assets to overseas countries that had strong growth in gross domestic product.

Although PDL had been criticising the Government’s reform policies, the company had found it difficult to trade in the negative New Zealand economy. Because of this it had focused on economics in Australia, Singapore, Malaysia, and Hong Kong, he said.

Those PDL executives who travelled overseas to the company’s factories, sometimes twice a month, were frustrated that the growth policies of these countries, especially the focus on net foreign exchange earnings and incentives for companies in South-East Asia, were the opposite of those in New Zealand. PDL needed a vital New Zealand economy. The company was not turning its back on this country’s economy — the company had 66 per cent of its workers in New Zealand, a payroll of SISM in Christchurch, a research and development laboratory in Christchurch with SUM of equipment, and S6OM of total assets in Christchurhch.

The company had R. and D. establishments in Christchurch, Napier, and now in Melbourne. The Victorian Government was offering incentives of 150 per cent for R. and D. and that was the deciding factor in establishing a research and development centre in Melbourne, he said. “At the Christchurch R. and D. centre 144 brand new product developments had been made in the last six months.” The company was focusing on its over-gear-ing. The current equity ratio was about 36.6 per cent, but the projection in three years time showed

this increasing to 43 per cent at March 31 balance date.

PDL’s sources of projected sales for 1988-89 were about 54 per cent New Zealand, 38 per cent in Australia, and 8 per cent from Malaysia. In a statement, PDL’s chairman, Sir Robertson Stewart, said that in spite of high interest rate charges, an over-valued New Zealand dollar, and increased Goverment

charges, the group was continuing to provide employment opportunities. PDL’s overseas concerns, particularly in Australia and Malaysia, were growing strongly because of the “booming conditions” of these countries. The directors intended to take advantage of these conditions. PDL has attributed its losses in 1987 to high

interest rates, peaking at 31 per cent, an extremely high exchange rate, and the start-up losses associated with new Australian and Malaysian companies. Total sales rose 25.6 per cent to $127.1M in the latest half-year compared with the previous corresponding period. This included New Zealand sales up 22.2 per cent and exports up 75 per cent. The pre-tax profit was $3.701M ($738,000 previ-

ously), and tax took $970,000 more at $1,189,000. Equity profits were $136,000 ($128,000) and there were no extraordinary items ($187,000 loss). Minority interests added $56,000 ($715,000 loss). The interim accounts show earning rates on shareholders’ funds of 15 per cent.on an annualised basis, and for earnings a 25c- share (annualised), 41.9 c.