COMPANY PROFITS

Evening Post, Volume CXII, Issue 50, 27 August 1931, Page 12

COMPANY PROFITS

A HEAVY SHRINKAGE

Aggregate earnings of- British. industrial joint- stock companies for the twelve .months ended, 30th June show, a reduction of.' 14.7 per c.ent- in their .earnings as compared .with' those-; of i1929-SO.. "The Econoinist'.'.contrasts. this, decline with the decline at 30th Junej-:1930 of 3.7 per cent.' on . that year. ■ In .an analysis made of the. balance-sheets of 2053 companies, "The Economist" soefn-'s—' ' ' ' ' ■Net earnings. .;■'■'■' ' . '£.'-■ " '1030-•...'.'.:•.•.■.■.:...'. -219.811,800 ■1931 •■...:....'.;...:.'..•■ 15",558,541.'. . , toss on the year .. ' ,£ 3,2,223,449- ---' Companies -reviewed onclude breweries, electric ■light, and'power, gas., financial and land investment, hotels and restaurants, 1 iron v an'd : steel,; motors, nitrate, -oil, rubber, shipping, tea, tramways, and textiles., '~';>, ■•r-C:,.,.'-:.'-..-.■', ;- ."',-' ■ .Increases, '.in; .'profits '. are ; shown in bre.weries'; .electric1, light and power, gas, and. tramways'. All the others' show decreases' with' the result as shown above of' £32,^23i,OoO;.less..profits for 1931 thau for 1930.. The. heaviest declines are in nitrate' :comj>iinies,;9.s.B per cent.;, rubber, 81.4. per; cent;;" testiies, 57.3 per cent.; shippirig, 31,3 per ceht.; tea, 28.2 per cent.; financial, investment^ and land, 27.9 per <!ent.; motor! arid"ci'HSv 23.3 per cent. All profits from • shops • and stores were1 down 6;7 per cent: ■ ■ Necessarily -dividends- 011 ordinary shares were-lower, the'average rate being 8.4 per: cent., compared wjt&. W. 3 per cent, a year ago.. The .average, rate of interest on debenture? was -5-per cent.,' and on preference shares -5.4 per cent. No ordinary^ dividends we|re 'paid' in the nitrate group ; breweries .avpraged 16.6 per cent.; electric supply, .75 per-cent.; ; financial, investment, and land, .4.6..per cent.; gas. 6.3 per cent.; hotels;an,d restaurants, 10.3 per cent.; oil, ]2(7 per cent:; shops and stores, 13.5 per cent., and'tea, 10.6 per cent:

It' is-remarked -that: the textile, group paid-out in ordinary; dividends apart from distribution• on- preference shares 4.4.per cent, more than the net earnings, and the amount allocated to. reserve in the case of the financial-, land i: and. investment com-panies-group, is'described as .fallen to"a lerel open to'criticism in a period of considerable economic,. 6tra'in;"',

• Concluding -ita- analysis, ."The Econoj mist" (.obser.vesi that the .maintenance of the average/rate' of ordinary dividend, "even.,at thejEpniewliat' reduced level, now disclosed,, has entailed; an appreciable reduction jn iridu'stry's reserve allocations. : ','lnyestors would'do well tobear in mind that in the absence of an early trade re: covery this' is a process '-which cannot prudently be long continued." ; .