NATIONAL TOBACCO CO.

Hawke's Bay Herald-Tribune, Volume 81, Issue 63, 7 December 1937, Page 13

NATIONAL TOBACCO CO.

Shrinkage in Net Profit The directors of the National Tobacco Company, Ltd., in their fourteenth annual report for the 12 months ended October 31, 1937, state that the manufacture of cigarettes has been added to the company3s activities. » During the year saies have fnrther gone ahead, as is shown by the excise and Customs duties paid, which amount to £260,000, compared with ,£230.000 for the previous year. Notwithstanding this increase in saies, "profits have still further declined and sunk to a level that is in strange contrast with our successful operations and the extra work put in. A bigger staff, a bigger output and our continuous efforts, all this has been of no avail in the face of the higher cost. A net profit of £14,000 as a result of a whole year3s ceaseless working of this huge machinery represents just a fraction over 2 per cent, on tho turnover. . . . If a complete history wero written of the New Zealand tobacco industry and records were available, it would probably be found that the money sunk and lost in the numerous fiotations far exceeds the pTofits that have over come Out of this industry. "What does the future hold in store for usf Higher wages, shorter hours and the ever-mounting cost of all and everything required for the manufacture of our product plaees us at a disadvantage compared with imported lines. And this can only be offset by a corresponding higher protection in the Customs tariff. Unless we get this protection, the industry is threatened in its existence and offers no encouragement either to manufacturer or growef»* The balance-sheet shows that the item property, plant and machinery is higher by £16,000. This increase represents part oi tne cost of the cigaretto plant, and extension of factory buildings. Stock of raw leaf, manufactured tobacco and materinl is higher by £23,000, and sundry dobtors by £6000. Corresponding with these increases, the credit balance rt the bank has shrunk in proportion, and uoa - stands at slightly over £43,000. After deducting all .charges, writing off £5043 2/9 for depreciation on buildings and plant, and allowing the sum £ £13,000 for income tax, there is a balance left of £14,677 9/6, which represents the net profit for the year. To this must be added the balance of £6351 8/9 brought forward from last year, making a ti *-al of £21,028 18/3 available for distribution. Out of this directors reeomMend the distribution of a dividend of 12J per cent. on the oriinary shares, and 8 per • cent. on the preference shares, absOrb- ' ug £16,353 13/1, and to carry oveiinto next year the balance of £4675 P/2. The company3 j results and appropriations in recent years compare as follows: —

1936 1937 £ £ Gross profit 112,335 101,943 Expenses 88,377 82,222 Depreciation .... 4,752 5,043 Net profit 19,206 14,678 Brought f wd. .... 3,496 6,351 22,702 21,029 To reserve — — DividendsPreference 0 8 p.c. 8 p.c. Ordinary ....... 12$ p.c. 12$ p.c. Amount ....... 16,351 16,354 Carried fwd. 6,351 4,675