NEW ZEALAND REFRIGERATING COMPANY

Otago Daily Times, Issue 26703, 24 February 1948, Page 7

NEW ZEALAND REFRIGERATING COMPANY

The sixtieth annual general meeting of shareholders of the New Zealand Refrigerating Company, Ltd., was held in the company’s offices, 159 Hereford street, Christchurch, on Wednesday February 18, 1948, Mr W. H. E. Flint, chairman of directors, ,presiding. In his address Mr Flint said:—“ The past year’s operations have been carried on under the conditions which we have come to regard as normal under bulk purchase agreements, and our balance sheet presents no unusual features. The volume of stock handled showed a small reduction in numbers, but this was more than offset by an increase in carcase weights and larger yield of by-products, which, together with other favourable movements, is accountable for the small improvements in results. “ You will see that after provision for dividend at the same rate as last year, £47,723 ss, and adding £25,000 to the reserve for renewals and extensions of buildings and plant, the carry-forward is £49,100 6s 9d, which compares with £46,853 12s 4d a year ago. Land, buildings, plant, etc., have again been well written down and the valuation now stands at £349,257 18s sd. We have, in recent years, followed a policy of steadily writing down works and plant, some of which by reason of age is at the stage when heavy expenditure is required on renewals and replacements, which, however, cannot be undertaken at present on account of lack of labour and acute shortage of materials. “ I gave particulars last year of some of the principal items of expenditure under this heading, which is foreseen, and an indication of the provisions which have been made to meet the expenditure when it is incurred. In view of the ever-mounting costs, we have added a further sum of £15,000 to these internal provisions, which now amount in total to £185,058. In addition to the repair and renewal programme above mentioned, there are many other directions in which outlay is called for to keep our factories abreast of present-day standards. This is a problem which we share in common with other freezing companies and I am sure you will approve our policy of conserving our resources to meet such expenditure. “ Expenditure of a capital nature amounting to £10,068 13s 7d, was charged to the reserve for rebuilding, renewals and extensions of buildings and plant. We recommend an appropriation of £25,000 to this reserve, bringing it up to £68,896 Is 6d. A ' point which I must stress is that anywriting down of assets in recent years will, to some extent, be offset by the inflated costs of unavoidably deferred repairs and improvements. Consignments Unrealised and Stocks in Works

“This item figures at £383,256 7s sd, a considerably larger- amount than last year. As mentioned in my address last year, with a return to free marketing of wool, a substantial increase in this item could be expected. Although meat, pelts and tallow are still under control, our trading risk in wool and other products not subject to control runs into large figures at present-day prices, and it is probable that this item of unsold consignments and stock will feature more prominently in our future balance sheets. You will appreciate the significance of this when I mention that the vaule of our turnover in wool and other free products at these price levels is in the neighbourhood of £1,000,000. In due course, no doubt, tallow and pelts will be freed from control and the addition of these will represent a considersbiy added trading risk, so that it will be apparent that our futuretrading operations will run into considerable figures. Having regard to the world-wide inflationary boom in commodities now in progress, it will be remarkable if the markets for the products in which we deal do not pass through fluctuations such as have been experienced in the past. I referred at some length to this aspect in my last year’s address when I said that it has always been our policy to handle our finance so as to cushion, as far as possible, the effect of market fluctuations.

"I dealt fully last year with the problems which lie ahead in restoring our meat distributing business in England when the time comes that the trade resumes its normal functions as distributors. I regret that I cannot say that we are any nearer getting back this important section of our business. A statement by the Minister of Food to the House of Commons some months ago seemed to indicate that it was the intention to return to private enterprise in the distribution of food products as soon as possible, but as this in the case of meat is dependent upon increased supplies, it is impossible to judge when the change may come about. “ The actual words used by the Minister were: ‘I think that, at any rate in certain foodstuffs, there are things which can be done to-day and done reasonably quickly. There are not many foodstuffs alas, but there are some where supply is becoming reasonably plentiful. Supply and demand are coming into balance at about a reasonable price level —at about the present price level, for example. In those cases we should quite unhesitatingly and steadily apply a policy of decontrol and delicensing, so that the winds of free competition may blow through those areas. I believe they would be refreshing winds.’ “In the meantime, the factors so prejudicial to the future of our primequality lamb continue to operate. I refer to the loss of goodwill in the English market, a matter which cannot be too often, or too foi’cibly, stressed. Free Marketing Desirable

“A further extension of bulk purchase is foreshadowed and seems almost a foregone conclusion. It would be unwise, however, to assume that there will never be a return to free marketing, and it is important that the reputation and goodwill built up over many years should be retained. The sooner that the trade is able to resume its functions .as distributors, even if only as agents for the British Government, the better will be the prospect of retaining the premier position which New Zealand has always held as against other competitors on the British market.

"The premium which our lamb commanded under free competition was due to our climatic conditions and careful breeding, in conjunction with efficient salesmanship,' which later kept our lamb always in the forefront with United Kingdom retailers. Up to the time of the outbreak of war our mutton and lamb were actively pushed by a group of selling agents acting for New Zealand shippers, whose main interests were bound up with the sale of our New Zealand product as distinct from Argentine chilled beef, and mutton and lamb from South 'America, Australia and elsewhere. Our own subsidiary, Towers and Co., dealt with from 6000 to 7000 retailers in the United Kingdom, concentrating on the sale of New Zealand lamb, as against competing supplies from other sources of origin. " These connections with the retailers were broken with the advent of the war, when a central organisation was set up which operated through a small number of large wholesale groups and provided a rough-and ready service.? This method, while meeting the exigencies of the war situation, is entirely unsuitable in peace-time, and its continuance is only justified while the shortage of supplies continues so acute. “ Sooner or later the public will demand a better service, with the individual’s right to select the particular kind of meat suitable to his taste and purse, and also to choose the retailer from whom he buys. When that time comes, Towers and Co. and other distributors will resume their functions in catering for the needs of their many thousand butcher customers.

“I have referred on previous occasions to the nature of the task ahead of us in getting this section of our business reorganised after the long break and the expenditure which may.

Annual General Meeting of Shareholders

be required in providing cold storage and in other directions. In referring to these matters last year, I mentioned the retirement of Mr A. T. Martin from the full-time duties as manager of Towers and Co., and that Sir Henry Turner would be available to take over his work at the Food Ministry. I may his duties when he is released from say in passing that Sir Henry is now in Australia with the food mission and expects to pay us a short visit before returning to London. We look forward to seeing him again, and to the opportunity of discussing the future which his all-too-brief visit will afford.

“ Our other subsidiary, Field and Co., which handles our casings, continues to give us a very satisfactory service under the able management of Mr J. P. Rafferty. During last year Mr Rafferty spent some months here visiting our casing factories. He spent some time in America and Canada investigating market conditions on his return journey, and is now back in London. I am sure that his visit, as in the case of the previous one, will be of benefit to that side of our business.

“ These two subsidiaries each carry on a specialised business in the sale of a particular product. Our general agency is carried on by our London office, in charge of Mr C. S. Coupar. All work in connection with the purchase of works’ materials, insurance, finance and the sale of wool and other products apart from meat and casings, is attended to by Mr Coupar and a small staff. We have decided that for technical reasons it will be an advantage to register the London office as a private company, and steps have been taken to register it in the name of ‘The New Zealand Refrigerating Coy. (London), Ltd.’ Large English Interests “It will be apparent to you from the foregoing that our interests in England are large and the ramifications of the business extensive. You will have noucea rrorn the statement accompanying our balance sheet Jthat for some years now we have not drawn dividends from our subsidiaries. The funds so accumulated should be adequate to materially assist us in meeting the expenditure which will have to be incurred in the work of reconstruction and development in England and elsewhere. “ Before passing to other matters, I should like to refer to an aspect arising from what I have already said about the possibility of an ultimate return to normal methods of meat distribution.

“ We must not lose sight of the fact that the prices of the various qualities of meat under bulk purchase were based on the average prices ruling in 1938, and, so far as we -know,, the same differentials between varying qualities are still incorporated in the present price structure. The range of prices in this structure reflected the preferences and purchasing power of the consuming public as it existed 10 years ago; but it stands to reason that they do not reflect the position as it exists to-day, nor as it may exist in a few years’ time. Relativity of prices has never been static in the meat or any other trade; they vary with the incidence of changing conditions and the changing tastes of the consuming public. , “In whatever ownership the bleat may be, Government or otherwise, the time will come when prices payable to producers must reflect changes in the trend of purchasing power and the taste of the ultimate consumers. Consideration of this aspect underlines the force of the point which I have endeavoured to make in my earlier remarks that it is of great importance to our producers that private enterprise should be restored at the distributing end, and, in particular, that everything possible should be done to safeguard the position of those selling agencies most closely identified with New Zealand in any future plan or reorganisation concerned with the sale of our meat and other products in the United Kingdom and Continental market. I am sure that our representatives will not lose sight of these aspects in the negotiations with the British Government for the extension of the bulk purchase contract, which, we understand, commence this year. The Labour Situation “In common with other freezing | companies, we experienced great diffi I culty last season i nsecuring enough men to man the works, and gx-eat difficulty was experienced in coping with the position during the busy peroid. I am glad to say that this season the position shows a marked improvement, the supply of labour offering is adequate for the needs of all departments, while a good proportion of the men trained in the work last year have come back to us. I would like to pay tribute to the excellent work which has been done and the good spirit prevailing. “Much has been done by way of providing improved amenities in the shape of housing accommodation, cafeterias and in other directions. The expenditure involved is fully warranted by results. "During the year Mr Dickson, of our head office staff, spent some months in America and Canada investigating the market situation of certain byproducts and obtaining technical information. Such visits have great value in keeping us posted on conditions and in establishing new contacts. “ With regard to the current season’s prospects, I would say that, apart from unpredictable market fluctuations, everything points to a satisfactory season. An excellent lambing and good feed prospects in most districts seem to assure a satisfactory volume of stock.

“ I must once more express our thanks to the Wanganui Advisory Committee for their assistance. We were fortunate in being able to co-opt the services of Mr H.-J. Donnelly, of Raotihi, as an additional member, and I take this opportunity of welcoming him to the committee. Mr Donnelly has always taken a keen interest in our Imlay Works, and has a wide knowledge of the district. You will wish Mr Glenn to take back our cordial thanks to the committee for their services. We are also indebted to the Marlborough Producers’ Freezing Committee for their co-operation during the season. Their activities have been of material assistance to producers in the district and to us. “The board wish to record at this opportunity their appreciation of the good work of the management and staffs at the various offices and freezing works. Mr Campbell, our general manager; and Mr Grandi, the company’s secretary; Mr Coupar, in charge of the London office; Mr Martin, who continues to keep his interest in Towers; Mr Rafferty, who is in control of Field and Co., Ltd., are the names I can mention, but there are thanks due to many others, including workers managers and works foremen, who are all working under abnormal conditions with many difficulties.

Re-election of Directors The chairman then formally moved the adoption of the report and balance sheet. This was seconded by Mr C. P. Agar, and, on being put to the meeting, was carried unanimously. The directors retiring in accordance with the articles were Messrs W. S. Glenn and H. S. Lawrence, and, in the absence of any other nominations, they were re-elected. On the motion of Mr P. Agar, seconded by Mr A. E. Miller, Messrs J. W. K. Lawrence, and W. H. Nicholls were appointed auditors until the next annual general meeting at the same remuneration as last year. A vote of thanks*, to the directors, management, and staff in New Zealand and England was proposed by Mr P. Agar, seconded by Mr D. Atkinson, and carried, and the meeting then terminated. [Published by Arrangement,]