COMMERCE AND FINANCE

Otago Daily Times, Issue 23500, 14 May 1938, Page 9

COMMERCE AND FINANCE

LOCAL AND OVERSEAS MARKETS

LONDON WOOL SALES i (United Press Association) (By Electric Telegraph—Copyright) LONDON, May 12. At the wool sales 9905 bales were offered including 6781 from Kew Zealand. and 7850 were sold. ' there a good selection, chiefly of New Zealand crossbreds, which, together with the best Australian merinosi sold actively to the Home trade and the Continent. Greasy merinos are how from par to 5 per cent, dearer,' and the withdrawals are chiefly aenong the slipes, owing to firm limits. ,'New Zealand greasy crossbred: “ Motukawa,” 9d and lOd. Halfbred: “ Ngalo Downs,” lOd and 12d. Scoured merino pieces: “R. and Co/t,” 17Jd and laid. WHEAT AND FLOUR (United Press Association) (By Electric Telegraph—Copyright) . LONDON}, May 12. Wheat cargoes are steadier. Parcels are quiet. Futures: —London: May, 38s 2Jd; November, 31s 9d. ( Liverpool: May, 6s 83d; July, 6s October, 6s 4d. The spot trade is ftuiet. Australian, ex ship, 35s and 36g. Flour is quiet. Australian, ex store, 25s 6d and 26s 6d. i . Chicago futures: May, 81 cents per bushel; July, 78|; September, 79J. FRENCH BANK RATE FIXED AT 2J PER; CENT, (United Press Association) (By Electric Telegraph-[Copyright) PAFIIS, May 12. The French bank rate lias been fixed at 2i per cent. ,1 AUSTRALIAN STOCK [EXCHANGES |. ■ (United Press Association) (By Electric Telegraphy-Copyright) SYDNEY, May 13. (Received May 13, fat 10 p.m.) After a week of growing strength, the investment market fettled down to a quiet and steady tone to-day. There was a sustained inquiry for shares of leading department stares. THE MORNING* SALES ! £ s. d.

GENERAL MfOTORS-HOLDENS YEAR’S SALES £10.000,000 ■ i . ! The 'managing director of General Motors Ltd., Mr L. J. Hartnett, at the annual meeting in Melbourne last week, said that the volume of business for 1937 amounted to £10,367,000. Thie net profit, £1,005,773, represented 9.7! per cent, of the total sales. I Mr Hartnell said the company had the utmost confidence in its future in Australia, and! had not hesitated to reinvest from profits large sums in additional capital expenditure. Following the investment of £450,000 in a new plant and equipment at Fishermen’s Bend ii 1936, it spent in 1937 £250,000 in extending manufacturing facilities, alterations to buildings and the like. This year a further investment of about j£ 160,000 in new machine tools was being made. There was under consideration also the outlay of a further £250,000 in new plant and equipment. The company was placing back into the i industry a large proportion of the profits earned. The sale of the company’s cars, utilities and trucks had been obtained in a highly competitive field. Its share of the Australian market amounted to 40 per cent, of the total. Last year the company expended in local purchases in Australia approximately £3,000,000. During the year, for the most part, 6500 employees were on the payroll, and £1,560,0110 was paid in salaries and wages. Taxes amounted to more than £300,000, and Customs duties to £ljoßo.ooo. IMPERIAL CHEMICALS AUSTRALIAN INTERESTS Imperial Chemical Industries of Australia and New Zealand, Ltd., which is associated with Imperial Chemical Industries, Ltd., of England, earned a profit of £313,690 in the year ended September 30 last, compared with £230.504 in the preceding year The figure for 1937 is struck after transferring £7500 to ralisation and revaluation of fixed assets reserve. This company, the issued capita) of which now; amounts to £3,732,569, is. like the English company, interested in a wide variety of industries It has subscribed for 90,000 £ 1 shares in the Commonwealth Aircraft Corporation Proprietary, Ltd., which recently began the manufacture of aircraft at Port Melbourne. Now in its tenth year, the company has rapidly grown to a large concern partly through decentralisation of the English company’s Australian interests and partly through absorption of established Australian and New Zealand businesses.

From the profit of 1937 it is proposed to transfer to reserve fund as a share distribution the sum of £264,857. This distribution is equivalent to a dividend of 8 per cent., which rate was paid in the two; previous years on smaller capital. During the year, the directors state in: their report. 233,334 shares were issued for cash. In exchange for a parcel of shares in British Australian Lead Manufactures Proprietary, Ltd., 219.678 shares were allotted to Imperial Chemical Industries, Ltd. Assets, which total £4,006,937. include £2,745,144 In investments.

COMPANY BALANCE SHEETS DONAGHY’S ROPE AND TWINE COMPANY, LIMITED PnW-uo capital: 1920-24, £35.250; 1925-37, £47,000; 1938, £38.750.

The net profit of £4229 for 1937-38 is the lowest recorded by the company for some years and is £I6BB below the profit earned in 1936-37, ine gross profit on manufacturing has dropped from £24,268 to £22,760 and overhead charges have increased from £14,052 to £15,033. These factors have resulted in a diminished net, profit, and doubtless this is the reason for the limitation of the final dividend to one shilling per share. An interim dividend of ninepence per share was paid in October. 1937. so that the total distribution for the year is.ls 9d per share or 83 per cent. This is the first departure from the usual 10 per cent, dividend which has been maintained for many years. It is noted that the dividend equalisation reserve remains unaltered at £SOOO. There is not much point in establishing such a reserve unless it is to be used for the purpose for which it was created. The payment of 8| per cent, requires £5140, which is £9ll in excess of the year’s 'net profit, A provision of £4OOO has. however, been made for taxation, and this would seem to be several hundreds of pounds higher than the actual amount of income tax the compjmy will be called upon to pay. The overhead charges, excluding depreciation, amount to £11,253. which is slightly in excess of last years total, while the depreciation charge has increased to £3779. In relation to the gross profit, these charges amount to 66 per cent., as compared with 65 per cent, last year. The fixed assets have again increased the item land, buildings, and plant now standing at £52,915, which is £22,535 in excess of last year's figure. This expenditure has been partly financed by the issue of an additional 11,750 shares of £1 each, and is the outcome of a substantial programme of reorganisation and modernisation of the plant embarked upon during the previous year. These new additions account for the depreciation charge increasing by £585. In the floating assets group considerable variations have taken, place. Stock has increased by £8386, while book debts and investments have diminished by £14,633, and the bank account by £6204. This makes a total diminution in the floating assets of £12,451, which represents roughly that portion of the capital expenditure not covered by the increase of capital. While no information is given as to the relative amounts of book debts and investments, it is probable that the book debts have, not altered to the same extent as investments. It is apparent from the reduction in the income from securities that a very large reduction in Investments has taken place. The investments representing the reserve for employees’ benefits, remain unaltered at £5025. while the corresponding income fund has increased by £353, and now stands at £3123. The floating assets now aggregate £64,587, and their relation to the total assets is shown in the following table:—

The reserves show little change, the only alteration being in the employees’ benefit reserve, which has increased slightly to £9IOO, while the item representing the income produced by this reserve fund has increased by £353 to £3269. The total disclosed reserves, excluding those for the benefit of employees, amount to £27,835, which, on the increased capital of £58,750, is equivalent to 9s 6d per share. The liability to outside creditors appears at £14,905, a reduction of £ 802. As the • provision for taxation is less by £1250, it would seem that other liabilities have slightly increased. It should be noted, however, that the group contains provision for contingencies. and, in the absence of information as to the individual items comprised in the group, it is impossible to say how much the liabilities really are and how much is in the nature of an undisclosed reserve.

COMPANY PROFITS RISE INCREASE OF 16 PER CENT. Profits of 14 selected Australian and New Zealand companies which balance in 1938, and whose balance sheets have been issued, rose from £688,656 in 1936-37 to £800,020 in 1937-38—an increase of more than 16 per cent. Ordinary distributions by the companies were £62,545 higher at £560,922. This amount does not include a special bonus of £72,875 paid out of reserves by a New Zealand company in the group. FINANCIAL EXPERIMENTS London cables on April 23 showed that renewed selling of New Zealand stocks had been a feature of the market for Government issues. New Zealand investors and non-residents interested in investments in that Dominion must (says the Sydney Morning Herald of April 26) view this with anxiety, and tear still further the new experiments in finance about to be undertaken bv its semi-Socialistic Government. The Government has announced ns intention to accelerate expenditure on social services and public works, and in particular to increase pensions ail round. It does not require any imagination to foresee higher taxation upon already overburdened taxpayers. Reports from New Zealand show that since the present Government assumed office the revenue of the Dominion has been buoyant. Whilst such prosperous conditions exist the public are able to bear high taxation, but it only requires a sustained fall in the export value of primary products to bring home very forcibly how ruinous high taxation can be. While the Lang Government was in power considerable capital was transferred from Australia to New Zealand, but a great deal of this has come back, and it is safe to conjecture that since the Savage Government took office many New Zealanders have invested freely on the Australian market, for the outlook generally is one of unccr tainty in Dominion stocks. Three months prior to the present Government in New Zealand coming into power, the price of the 4£ per cent. (1948-50) New Zealand Government loan on the London market was £199 while that of the 4 per cent. (1943-48) Commonwealth issue was £lO4 7s 6d Latest cables quote the New Zealand issue at £IOO 10s, a drop of £8 10s, while the Australian issue, at £lO2 2s 6d, has fallen by only £2 ss. This comparison is unfavourable to New Zealand, and is doubtless due to the Socialistic legislation of the New Zealand Labour Government.

CHRISTCHURCH STOCK EXCHANGE

THE WEEK’S ACTIVITIES (Special to Dailt Times) CHRISTCHURCH, May 13. The Stock Exchange becomes more gloomy as time passes, but there are no active signs of weakness; in fact the trend is rather the other way. Business is virtually at a standstill except in a few selected industrials, and the chain stores’ turnover this week has been smaller for a full week than for a long time, and at no stage did the market as a whole display any animation. There was a consistently good demand for Government issues, which were firmer though there was only one sale. Exchanges overseas have been in the same condition as the New Zealand markets, and though there has been a more encouraging tone, business has been severely limited except for one heavy day’s trading in Sydney. Investors here and overseas are now realising that there will be no immediate or marked improvement in values even if the American and European situations could be clarified at once. Most commodity and other markets have slipped back so far that a return of confidence will at the best be slow. New Zealand is fortunate in that dairy produce and meat, the two main sources of income, are remaining consistently profitable in the world’s markets, though wool has been a disappointment. The turnover for the week amounted to £ 13,504, against £18,798 last week. There was rather more activity than usual in banks, but prices in this section were erratic. The most encouraging feature was undoubtedly the good advance made by New Zealands, which touched £2 4s 9d in dealings at the mid week, but slipped fractionally thereafter. Commercials of Australia had a number of dealings, rising to 16s 5d before coming back to remain steady at 16s 3d. There was little activity In other sections. Dalgety’s had a sale at £8 8s early and stiffened at the end to buyers at that price and sellers 7s away. Goldsbroughs were also a little healthier, with a sale at £1 10s 6d. There was a small demand for New Zealand Refrigerating shares, which remained steady at 8s 4d throughout the week.

New Zealand Breweries were very quiet after a comparatively active previous week and remained steady at £2 4s 9d and £2 4s lOd.

Amongst the miscellaneous Issues, various Woolworth’s shares were the most active, the market for Properties (rights) being particularly so. The Sydney issue was slightly lower on the week, but South African shares showed a sharp rise to sales on Wednesday at 16s 4d. There was a slight recession thereafter. Rights moved up 2d in active trading to sales at 3s 6d and 3s 7d. G. J. Coles made a sudden and most satisfactory upward move at the beginning of the week, when there were sales at £4 Os 7d and £4 Is, but to-day sales were made at £4 3s 3d There was a fair inquiry for Broken .Hill Proprietaries, which moved up from £3 to £3 Is 6d. There was a recession later to £3 Is, but the market closed a little firmer than that. Contributing shares were livelier than for many weeks, and moved up 3d on the week to £1 17s. Dunlops were quiet, and after a sale at the mid-week at £1 2s 3d, were shaded at the end Ordinary Electrolytic Zincs had dealings at up to £2 Is lOd, and finished about there. Preference were firmer. The mining section was exceptionally quiet, with dealings, apart from one sale of Rawang Tin, at 9s, confined to Mount Lyells and Mount Morgans. Lyells were very erratic, and after moving up sharply to £1 6s lid came back to about £1 6s 2d. Morgans reached 9s in the middle of the week, but were shaded later to 8s 7d. where they finished. CONDITIONS IN AUSTRALIA World conditions influence the Australian position, but the excellent state of the national economy has been a resisting force for some time. Actually there is a limit to the degree of resistance—a limit imposed (Messrs H. Byron Moore, Day and Journeaux state in their latest monthly review) by our dependence on world buyers for our chief exports. A double-edged danger is a general drought. It at once reduces our volume of exports and Imposes a harsh strain internally, Australia has had an extraordinarily protracted favourable run of seasons. Local droughts have been not infrequent in the past 20 years or more. Dry spells have been numerous, but in most cases rains have dissolved the danger in time. At the present time dryness is occasioning anxiety in many of the wool areas and important sections of the wheat belt. Already the effect on the 1938-39 clip has been detrimental and diminution in quantity is inevitable, with loss of some quality likely. A quick advent of winter conditions will menace flocks. Lessened ■lies and crops have an export significance that will be readily realised. Already in the expired portion of the 1937-38 wool season total receipts are £15,000,000 less than for the corremnding period of last season, the figures being £35,133.000 and £50,260,000. The influence of the dry season has been visible in the banking figures, there having been an increase in advances when normally a seasonal decrease should be evident. Withdrawals for stock-feeding has been an influence. With export prices at moderate levels, quantity assumes greater importance. Certainly Australia’s export price level is disturbing, having recently touched, according vo an official statement, the lowest point since 1935. The index figure 1000) in February declined to 736, against 934 in February. 1937. It would seem that London funds must be drawn upon, although the Commonwealth Bank Board has stated that capital imports will offset much of the deficiency between the favourable balance and the amount necessary for debt service and other charges. From the domestic angle there is much to please. Revenues are buoyant, although every bit of surplus, and more, will be mopped up by expanded defence plans. Statements to the effect that there will be no serious increase in taxation are viewed pessimistcially in financial circles. Heavier or wider taxation appears inevitable to meet the large disbursements proposed, in all, £43.000,000 is to be expended over the next three years for defence. Of the £15,000,000 to be spent in 1938-39, a preliminary statement said that approximately £7,000,000 will come from revenue, £5,000,000 from defence loans, the balance to come presumably from new taxation. A bright feature is that politically the Commonwealth and the States are in good or moderate hands. The banking position is sound, although the effect of lighter export cheques will be an influence shortly. CANTERBURY MARKETS GRAIN AND POTATOES (Per United Press Association) CHRISTCHURCH. May 13. Dry and settled weather has allowed wheat sowing to go ahead in many districts though some of the heavv land nas not yet come into condition. The sowing gives promise of being heavy this year, but a continuation of good weather will be needed to ensure a full crop. Little wheal is now left on farmers’ hands, as the quantity in stack waiting for increments appears to be smaller than usual. Practically the only interest m the produce markets is in potatoes, which are at present weaker than they have been all the season. The nominal quotation is £3 on trucks for Buttons and Dakotas, but there are not buyers about. Even at this price, the North Island demand has evaporated South America at present appears to be hopeless. It is reported that one merchant who cabled asking for an offer received an intimation that, business might bo done for a small lot at £7, New Zealand, per ton. This, of course, would barelv nay freight and other charges. Chaff still moves freely where quality can be obtained, but quality is extremely scarce. Oats are dead-

MINING NEWS ARGO GOLD DREDGING COMPANY DIVIDEND OF ONE PENNY A SHARE A dividend (No. 13) of one penny per share (free of income tax) has been declared on all the shares in the Argo Gold Dredging Company, Ltd., and this will be payable on May 23. The dividend represents a distribution of £2OOO to the shareholders, and makes a total of £25,200 paid in dividends since operations were commenced. The sum of £2OO has been placed to the general reserve fund, which now stands at £2400. MAORI GULLY DREDGE (Per United Press Association) GREYMOUTH, May 13. The Maori Gully dredge reports a return of 61oz Idwt of gold for 125 J hours' dredging. MOSSY CREEK RETURN (Per United Press Association) GREYMOUTH, May 13. A return of 40oz 16dwt of gold from 9178 yards is reported by the Mossy Creek dredge for 127 hours’ work. NEMONA RETURN (Per United Press Association) GREYMOUTH, May 13. The Nemona return was 540 z for 122 hours (141,000yds dealt with). BUTTER AND CHEESE (United Press Association) (By Electric Telegraph—Copyright) LONDON, May 12. Butter is strong. Danish, 130 s. Choicest salted and unsalted: New Zealand, 1345; Australian, 1325. Cheese is firm. New Zealand white, 70s; coloured 70s od. Australian white, 68s; coloured, 68a 6d. DOLLAR AND FRANC (United Press Association) (By 1 Electric Telegraph—Copyrighti LONDON. May 12. Exchange on New York is quoted at 4.97§ dollars to the £ and on Paris at 1773 francs.

Commonwealth bonds- 1~ 102 4 p.c., 1938 .. .. 4- • • 0 0 4 p.c., 1941 .. .. 4 ■ .. 102 18 9 4 p.c., 1950 .. .. 3 . .. 102 17 6 Bank of New South Wales 32 5 0 Associated News (preft) 1 4 0 Anthony Hordern • i. • • 0 18 10i Australian Glass .. f . .. Broken Hill Proprietary .. 4 18 3 2 9 3 2 2 3 ADDITIONAL! SALES National Bank (£5 patid) .. 7 0 0 Bank of Australasia .. .. . 10 3 0 1 2 0 49 0 0 2 9 0 Tooths * I. • • • 2 17 6 Australian Glass .. 4 14 0 Anthony Hordern j.. .. 0 19 0 Kandos .. . • • • | • • • • 1 5 J-i Mort’s Dock .. .. | . .. 0 10 u Gordon and Gotch j .. .. 2 13 9 0 15 9 1 12 3 Bankers and Traders 1 10 8 Producers and General .. 0 7 6 Edwards and Dunlop 2 9 0 Mount Morgan .. f .. .. 0 8 10 Mount Lyell .. • • 1 3 6 2 8 n Tonkah Harbour ..j .. .. 0 10 10 MELBOURNE, May 13. There was continued demand for Coles; .'but other .industrials and mming are Still' quiet. J £ s. d. National Bank (£10$paid).. 14 0 0 Aust. Paper Mfrs.; (prof.) 1 4 9 British Tobacco . ,| .. .. 1 8 9 Carlton Brewery . -j .. .. 3 7 0 G. J. Coles .. .. .. .. 4 4 9 Australian Glass j .. 4 13 6 Dunlop Perdrlau . fc .. .. 1 2 6 1 (pref.) 1 17 9 Cox Bros. .. .1 0 16 3 Felt and Textiles .t 1 13 6 Herald and Times] .. .. 2 19 0 Hume Pipe .. * 0 19 6 Yarra Falls .. J Australian Foundation In1 19 0 vestment Trust j .. .. 0 4 10 Mount Lyell .. .. ;. .. 1 6 3 Broken Hill Pty. L 3 2 9 (new issue) 1 18 4J North Broken Hal .. .. 2 8 3 South Broken HUH .. .. 1 11 0 Zinc Corporation.' .. .. Tonkah Harbour 4 4. 0 11 0 0 Loloma . • ■ ■ 1 2 7J

Reiervei General Chnrgci Trading Proflt Net Proflt Dividend and Bonus Mur. 31 £ £ £ £ p.c. 1920 .. 19,700 33,014 10,898 4,309 10 1922 .. 21.501 42.146 10,011 5,064 10 1924 .. 29,599 43,948 8,879 7.380 10 1929 .. 24,030 42,988 12,067 7,505 to 1928 .. 30,012 39,698 10,714 7,570 IQ 1930 .. 38,661 40,235 13,691 9.106 10 1932 .. 32,921 32.243 9,277 3.840 10 1934 .. 33,900 31,107 . 10.564 4,704 10 1935 .. 35.397 31,337 10.699 6,197 10 1938 .. 36,404 13,016 12,706 5,707 10 1937 .. 38,150 10.858 13,411 5,917 10 1938 .. 37,285 11,253 22,790 - 4,229 8% '‘Including employees’ benefit fund reserve, but excluding book debts, etc.. reserve.

Liquid Aueti Total Aiutl Ratio Mar. 31 , £ £ p.o. 1920 .. 49,057 79.091 61.64 1922 .. 47,161 7,4,045 63.69 1924 .. 57,965 81,619 70.99 1928 .. 59,197 82,081 72.12 1928 .. 66,277 88,511 74.88 1930 .. 67,664 92.855 72.87 1932 .. 67.242 90,442 74.34 1934 .. 76,056 94,895 80.16 1939 .. 80,028 97,028 82.48 1936 .. 8-1,05! 102.301 82.16 1937 .. 76,685 107,065 71.62 1938 .. 64,587 117,502 64.97