INCREASED COSTS

Dominion, Volume 31, Issue 71, 17 December 1937, Page 12

INCREASED COSTS

Gear Meat Company’s Year PRICE FLUCTUATIONS Chairman’s Review References to increasing costs and to the fact that nearly 40 per cent, of the increased net profit was absorbed by provision for income and land taxes only were made at the annual meeting of shareholders of the Gear Meat Preserving and Freezing Company of N.Z., Ltd., held yesterday.

In moving the adoption of the directors’ _ report and the balance-sheet, which were reviewed on the financial page of “The Dominion” on December 10, Mr. Allan Strang, chairman of directors, congratulated shareholders on the result of the year’s operations. In the Wellington province, he said, the weather conditions were not very favourable for the production of firstclass stock, an'd in consequence the quality and weights were not as good as in the previous year. The meat market remained steady throughout, and very satisfactory figures were received for wool, pelts, and tallow. The latter commodity began to fall toward the end of the year, but fortunately they had little in stock and the season's kill had been almost completed. At the beginning of this season there remained very little of last season’s products to market, the 'directors, as in the past, preferring, to enter the new year with empty stores. At the moment the frozen meat market was firm but almost all the other goods they produced had slumped badly, and there was very little inquiry for pelts and tallow. With regard to wool, shareholders were well aware of the position to-day and of the results of the early sales held in the Dominion. Costs Increasing. On November 30 last year a new award, which expired on June 3.0 last, was made with the Freezing Workers’ Unipu. The agreement for this season had not yet been finalised; in fact, the case was being heard by the Court of Arbitration sitting at Auckland this week. The last award gave considerable increases in wages and several anomalies were discovered which they were striving to have rectified at the present hearing. “Costs in many other ways are also increasing,” said Mr. Strang, “and I must point out to the farming community that in the end the burden will fall on their shoulders as these increases have to be taken into account when fixing the prices of live stock.” From January 1 the levies on mutton and lamb were to be increased from one penny per carcase to lid., and on beef the increase was id. per quarter. From the same date the British authorities were insisting on the same system of inspection as was carried out in Australia and the company would be compelled to employ additional inspectors to incise and examine numerous glands in all mutton intended for export. These were two instances of increased charges over which they had no control, and there were others which, when added together and calculated on .the year’s output, amounted to quite a large sum.

As a result of his visit to London, Mr. Strang said he was satisfied with the way the company’s business was being conducted there and was pleased again to hear extremely favourable comments on their exports. It would be seen that the balancesheet did not include in the fixed assets the Lambton Quay and Tory Street (Petone) properties amounting to £35,000, and the same sum which stood in the liabilities under reserves had also disappeared. This reserve was created when the capital of the company was £460.000 and now that the capital was only half that amount the directors felt that it was no longer required and the necessary transfers to delete these items were passed. Freehold properties and working plant were less than last year by almost £6OOO due to a sum written off for depreciation and the sale of land at Feilding and Petone, Heavy Taxation. A sum of £12,400 had been set aside for taxes in New Zealand and Great Britain. This amounted to 391 per cent, of the net profit for the year and provided for income and land taxes only. Wellington City and Petone borough rates also cost a considerable sum and there were indications that they might be again raised in the future. The machinery had been carefully overhauled during the slack period and the buildings and plant were in good order. The directors wished to thank all members of the staff for their loyal service during the past year, which was not without its trying experiences.

Sir Harold Beauchamp, seconding the motion, said that at the commencement of 1937 they were faced with an abnormal increase in wages and heavy taxation, both Governmental and municipal. Like many large industrial concerns which found it necessary to own and occupy high-priced land for the carrying on of their business, the company was now called upon to contribute, roughly, £1920 for land tax as compared with £320 before the rate was' increased—an advance of no less than 500 per cent. A Satisfactory Year. Faced with these heavy handicaps, it looked then as if they would have a hard task to make anything like a good showing for the year just closed. Fortunately, later in the year there was a marked improvement in most of the produce handled by the company. As was usually the case, they had to pay extreme rates on the opening of the season for lambs —frequently much beyond the parity of London value. Still it was necessary, in order to preserve their connection, to buy at these high figures, and then trust to recoup losses on the sale of meat by the realisation of such lines as wool, pelts, fertilisers, preserved meats, etc. That was, fortunately, what happened, and it would account for the fairly large increase in profits for 1937, as compared with 1936.

In the competition for early lambs, the Gear Company was not so favourably situated as freezing companies in the South Island, owing to their season opening at least six weeks later. By ■the time these companies came into the market, the extraordinarily active demand for early lambs had somewhat subsided.

After making-full provision for all known liabilities, the company would have a carry forward of £8577, ns compared with £6925 for 1936.

Mr. R. IV. Bothamley, after congratulating Hie directors on the “truly wonderful balance-sheet," inquired if the

directors’ fees to £l5OO were fixed ip the articles of association. The chairman replied that they were. At a later stage Mr. Bothamley rose to discuss the point, but the chairman declared the meeting closed. The retiring directors. Sir Harold Beauchamp. Mr. R. IV. Gibbs and Mr. D. H. S. Riddiford were re-elected unopposed. Sir Harold Beauchamp said he had been a director of the company continuously for slightly over 43 years and was proud of Ihe fact that during that long" period he had not had to face an election.