Firestone pouring $6M into plant

Press, 31 January 1986, Page 10

Firestone pouring $6M into plant

Firestone NZ, Ltd, will invest $6 million in equipment at its Papanui tyre factory in the next few months, says the chairman, Mr R. L. Deal, in the annual report. This move is in spite of the company’s losing production of more than 90,000 tyres last year because of industrial problems.

Mr Deal says that the lost production had a serious impact on the company, its customers, and employees, and resulted in the Government granting import licences for a large volume of tyres. The imports had an impact on sales and profits in the latter part of the financial year, he says. “The company’s policy is to offer fair and equitable wages and conditions of service, and we will

continue to resist what we feel are excessive union demands.” Firestone realises that the profit is not satisfactory when compared with the existing inflation rate, and the S6M investment programme will be used to improve efficiency and productivity. “We believe great benefits will arise from this substantial investment in the 1986 financial year.” This year negotiations with employee representatives over productivity must succeed, he says. “Growth is likely to be achieved only by gaining market share from competitors and expanding exports.”

As reported, the group net profit rose 9.9 per cent to $7,444,000 in the year to October 31, compared with the previous

corresponding period. Sales were also ahead 9.9 per cent to $103,089,000.

The profit was after providing $285,000 more for tax at $5,435,000 and $200,000 more for depreciation at $1,944,000.

A recommended final dividend of 8c a share increases the annual rate from 15c to 17c a share (17 per cent). The dividend requirement is $1,725,000 and it is covered 4.3 times by the profit. Shareholders’ funds rose $5,719,000 to $34,057,000, including steady ordinary capital of $10,145,000. Working capital improved $3,494,000 to $18,621,000 and the current ratio was steady at 2.3 to one.