Lovell repeats dividend but profits slump
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IN addition to its shipping interests Lovell's Shipping and Trans port Co. has a substantial stake in the businesses of stevedoring, road haulage, wharfage and travel. For the group as a whole 1966 was by no means a good year. In fact pre-tax profits slumped to £57,341 from £186,629 for the previous year. As the directors have previously pointed out these results were adversely affected by the seamen's strike; this cost Lovell's approximately a gross £65,000. But the strike at Bristol Docks also ate into profits to the extent of about £25,000 gross.
This is the second set of results put out by this group since the shares came to the Midlands and Western Stock Exchange. Despite this set-back to profits the directors propose a final dividend of 6 per cent, which maintains the year's total at 9 per cent. But because more than 2 per cent of this can be attributed to investment allowances, a better showing will need to be made by profits during the current year to avoid concern being thrown around the dividend. The market takes the view that the latest payment does in fact suggest board-room confidence in the outlook. A fall of 14 per cent in pre-tax profits of the Dunlop Group during the year's second half more than wiped out the rise recorded during the first six months of the trading year. For the full year the pre-tax profit amounted to £17.7 m. compared with £18.8 m. for 1965. It must be remembered, of course, that the latest total suffered at the hands of the devaluation of the Indian Rupee—to the extent of £900,000 in fact, and that the previous year's total included a once-for-all dividend of £700,000.
An explanation by the directors shows that a severe down-turn in the United Kingdom and in Germany during the final quarter of the year adversely affected the group's trading. Despite the setback, however, the proposed final dividend of I ld. a share holds the total for the year at Is. 7d. a share.
A revival of the UK economy will undoubtedly boost Dunlop's profits, but I expect a conservative dividend policy for a few years ahead; there is the substantial capital programme to carry through.