NATIONAL TOBACCO COMPANY.

Press, Volume LXVI, Issue 20101, 3 December 1930, Page 12

NATIONAL TOBACCO COMPANY.

NET PROFIT, £44,570. DIVIDEND OF 15 PER CENT. The following ia the directors' report (to October 31st) to be submitted to shareholders at the seventh annual meeting to be held on December 16th, at the company's registered office, Port Ahuriri: — The past year has been marked by an unexpected event that has caused consternation and dismay amongst those connected with the New Zealand tobacco industry. I refer to the new Customs Tariff, which, as originally drafted, increases the excise duty on New Zea-land-manufactured cut tobacco from Is Sd to 2s 8d per lb, while reducing the import duty on foreign leaf from 2s to Is per lb. Whatever can have induced the Government to encourage the use of foreign leaf and penalise New Zealandgrown? Evidently it is the shrinkage in the Customs duties, for which, of course, the local industry is made responsible, and it follows that in the interest of revenue its further expansion must be checked by any means, hence this hostile tariff. What a tragedy! Imagine, if the Exchequer were to say to the New Zealand Woollen Mills, "Look here, it is all very well for you to work up New Zealand wool but you deprive us of -evenue. Before you started manufacturing we used to collect a lot of duty on imported textiles which are now being turned out in your mills. We cannot allow this thing to go on and will havo to put a tax on your goods." The tobacco industry is in a similar position. Foreign brands vanish one after the other from the market and are gradually supplanted by the local produet, and naturally Customs duties on such imported lines decline in proportion. But is this a reason why the local industry should be hampered in its progress? It was only to be expected that such hostile tariff would meet the strong opposition and raise a storm of indignation among growers who felt themselves threatened in their existence and now had to face American competition on hopeless terms. Happily their concerted efforts resulted in Is Sd per lb, but the import duty on foroign leaf is increased to 3s per lb. Tho limitation clause, however, defeats the object for which tho increase was meant, namely, more revenue, and it favours again tho manufacturer who uses wholly or mainly foreign leaf to tho extent of Is per lb. There is another weak point in this tariff and that concerns the duty on imported manufactured tobacco which has not been adjusted in x>roportion to the duty on raw leaf. Such manufactured tobacco is allowed to enter New Zealand at the old duty of 4s 2d per lb, which is 6d less than tho aggregate customs and excise duty. It would thus be cheaper to import tho ready manufactured article than to manufacture it here on the spot. The outcome of numerous appeals for redress has been tho appointment of a Parliamentary Committee with the object of investigating the position. This Committee has done splendid work and we trust that their recommendations to tho Government will find a sympathetic ear. Moanwhile, until finality has been reached, we aro kept in a state of suspense. Tobacco the world over is one of the greatest revenue producers, and ao it is in this country. Though the Customs may have registered a shrinkage in the receipts, tho industry has contributed handsomely to their takings. We alone have paid the Customs in excise and import duties a total of £124,490 12s lid for the last financial year, but this amount, provided our turnover remains the same, will be larger by at least £15,000 at the end of tho current year when the new tariff will have been operating for the full 12 months. These are our direct contributions to revenue, but we are benefiting the eonntry in many other directions by helping to keep kindred industries going. Wo are spending eveiy year more than £30,000 on tins, canisters, and packing material; £35,000 in wages and salaries, £6OOO in railway freights, and we have paid over to growers last year in the vicinity of £50,000 for New Zealandgrown leaf. The item of packing cases made of New Zealand timber amounts to £3OOO, and we are using many tons per month of wrapping paper made by New Zealand Paper Mills, while large amounts are paid out to printers supplying us with millions of labels and wrappers. And on top of all this the Commissioner of Taxes will claim from us this year a big handful of money, £17,000, for income tax. Therefore, whatever the shrinkage in dnties on imported tobacco may amount to, the Government gets full compensation through the benefits it derives in an indirect way.

Reviewing the company's operations for the year, shareholders have every reason to be well satisfied with the result. Although saturation point has practically been reached, our sales have again increased, at the expense of the imported article of course, and our brands have become more popular than over. Our profits may seem large, but they are the result of a huge turnover. In reality, we are working on a very narrow margin, so small that, if we were for instance to lower our prices to the trade only by ljd per 2oz tin, our profit would disappear altogether and there would be nothing left even to make adequate provision for depreciation. The industry is taxed to its utmost limit and can bear no more. Any additional burden must spell disaster. The other figures of the balance-sheet require hardly any comment. Share capital remains the same as last year. Some additions have again been made to the factory buildings at a cost of £2500, and the property held by the company, including plant and machinery, now. represents a value of £.45.505 12s Bd.

Cash in hand and at bankers amounts to £65,149 10s 2d, including £40,000 fixed deposit earning interest at the rate of 4} per cent, per annum. After deducting all charges and allowing the sum of £17,000 for income tax, the profit and loss account shows a balance of £.44,570 12s 4d, which represents the net profit for the year. To this must be added the balance of £4525 13s 2d, brought forward from last year, making a total of £49,096 5s 6d.' Out of this the directors recommended the distribution of a dividend of 15 per cent, on the ordinary aliases, and 8 per cent, on the preference shares, both free of income to transfer to reserve the sum of £25,000 so that this account will then stand at £90,000, and to carry over into next year the balance of £6227 5s 6d.

DAIRY PRODUCE. Dalgety and Company, Ltd., hava received tho following cablegram from their London office, dated December Ist:— Cheese —Market weak. Quotations: New Zealand coloured 58s to 595, whita 60s to 61s. EGG AUCTION. Messrs Harris "Bros., Ltd., report , that tho usual weekly auction sale of "Feather Brand" guaranteed new-laid eggs was held yesterday afternoon. The prices realised wero: Hon eggs, Ist grade (2oz or over) Is 2d; hen tSga, 2nd grade (under Sob) 1»