FROM THE SHEEPS' BACK

NZ Truth, Issue 1147, 24 November 1927, Page 4

FROM THE SHEEPS' BACK

(By "Fiat Lux.") <

From a net profit of £24,723 m 1923 down to a net loss of £1567 m 1927 is the unfortunate experience of the Bruce' Woollen Manufacturing Co., Ltd.

ADMITTEDLY trading conditions have been very difficult during the

past few years; raAv materials have fluctuated m price, whilst the market for finished goods has been keenly competed for by the several additional woollen mills which have commenced business during the time. v Marketing prospects for the woollen trade m the Dominion have altered out of all recognition during the past five years. A woollen manufacturing firm to be successful to-day must alter both its production and marketing plans if it la to remain successful. It ls the age of specialization and this writer has consistently advocated m these columns the amalgamation . of woollen mills so that one selling or-

ganlzation only should be maintained for the Dominion and each mill plant reorganized to produce a limited number of lines only.

Thus quality should be improved and expenses both of production and marketing should be materially reduced, the savings thua effected providingshareholders with a dividend without increasing the cost of goods to the consumer.

Something drastic has to be done if shareholders m the woollen manufacturing industry are to be protected

from the loss of their capital and the suggestion outlined above is well worthy of consideration by the heads of the industry. The following table shows with pitiless clarity the slide which the Bruce Company's earnings have suffered m the last four years' trading: 1924 1925 19£6 1927 Gross profit 34,654 81,817 26,798 16,354 Net profit .. 18,016 13,788 9056 Net loss ..... 1567 Regarding the balance-sheet of September 19, 1927, shareholders' funds have decreased by a total of £10,567 owing to the lack of net earnings for the, period and the liabilities have increased by a net. total of £11,126. • The largest individual increase is In

the bank overdraft, which has risen by £20,578 to £86,176, which is secured by debentures;

"Fiat Lux" is particularly pleased to observe that deposits are being reduced, the amount paid off during the past year being £7420, leaving a balance on this very unsatisfactory account of £12,839.

Regarding depreciation of plant and premises, this continues to be treated according to the "profits" available and consequently no provision has been made for this expense for the year under review.

"Fiat Lux" is pleased to learn that the capital has been increased by the creation of £50,000 7 per cent, cumulative preference shares.

On paper the ordinary shares appear to be quite sound, but are unlikely to meet with any demand at all on the open market until the company returns to a dividend paying basis. .