COMPANY MEETING THE AUSTIN MOTOR COMPANY
Page 13
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EXPORTS REACH NEW RECORDS ENCOURAGING OUTLOOK FOR 1949-50
THE thirty-fifth annual general meeting of The Austin Motor Company, Ltd., was held on December 14 at Birmingham, MR. L. P. LORD (chairman and managing director) presiding.
The following is an extract from the statement by the Chairman:— Last year the value of stock and tools was shown in the balance sheet of the parent company at £4;521,600. This year it has increased to £5,897,197, which reflects the expansion of production during the year.
Replacement of Fixed Assets
The problem of replacing fixed assets at present prices is one of the most serious which directors of companies such as yours have to face, accentuated as it is by fantastically heavy taxation, which leaves a final net profit quite out of proportion to turnover and consequent wear and tear of machinery. Thus it is obvious that increased wages cannot possibly be paid from profits, as is suggested in some quarters.
The large increase in the amounts owing by subsidiaries to the parent company is mainly in respect of the Canadian, American and export companies, and arises from the rapid expansion in export trade. . Taxation of the group charged in the year, amounting to £884,794, appears high in 'elation to the profit, but this is due mainly to losses in the United States, which cannot be set against profits for taxation purpos'Es in the year under review, but any amount recovered will benefit future periods. £50,000 has again been added to the special fund for application to cases not covered by existing pension schemes, raising the fund to £200,000. Providing satisfactory arrangements can be made with the Board of Inland Revenue, it is our intention to transfer this money to a separate fund, and so long as the finances of the company permit, to make annual contributions to such fund.
It will be administered by trustees appointed by your Board and its main purpose will be to provide gratuities, allowances, and pensions to long-service works employees and office and administrative staff.
At he last annual general meeting in December, 1948, you authorised the directors to issue 2,071,556 Ordinary shares of Ss. at 25s, per share to be offered to the holders of Ordinary and "A" Ordinary stocks in the proportion of four new Ordinary shares for every five 5s. units of stock held by them.
I am pleased to report that the issue was an .outstanding success. The Ordinary and " A " Ordinary stockholders took up 1,987,292 of the shares offered to them. This left a balance of 84,264 shares but applications were received froM all classes of stockholders for 4,397,238 shares. Allotment of the 84,264 shares was made by ballot and the successful applicants received 50 shares each.
Production am sure you will be glad to know that we are easily the largest producers of cars and commercial vehicles in Britain to-day. The production of 126,685 vehicles of all kinds was a record for your company, being 48 per cent, higher than the previous year, and since July 31 last it has continued to increase steadily. For the first fifteen weeks of this financial year it has risen by 23 per cent. over the year under review, and"for the past three months, ending November 30, has been running at the rate of well over 150,000 vehicles a year, plus an average of 275 tons of spares per week. This rate should continue until the end of December; after that for the first quarter of 1950 our allocation of steel has been increased and we may produce an additional 300 vehicles per week. The permitted allotment to the home market will be about 700 per week, and the remainder must be exported, as many as possible going, of course, to the hard currency markets. The process of installing the most modern machinery and methods is proceeding apace, and the new assembly building and equipment when finished next ybar will compare favourably with anything in the world..Our workpeople are keen and enthusiastic and are rightly proud of the most favourable comments which our numerous visitors pass on their efforts.
Exports
During the year under review; in which the insistence of the Government on exports in no wise abated, we achieved substantial new records with 76,000 vehicles sent overseas, of a total value of £24,100,000. .
These vehicles represent a 41 per cent. increase its numbers over last year, and in values a 44 'per cent. advance. In fact, in the short period of two years the exports of Austin cars and trucks have more than doubled, while our 1948-49 exports of 36,516 vehicles to the vital hard currency markets alone exceeded our total exports for 1946-47.
As dollars are still the most sought after currency, I must make particular reference to the United States and Canadian markets. Sales iii the United States are really disappointing in spite of devaluation, intensive advertising, record breaking demonstrations at Indianapolis and every possible inducement on our part. We went to the extent of reducing prices to such a level that we incurred a loss on every car shipped. The loss made by the American subsidiary last year amounted to £149,744, which accounts for all our losses on export except for £715 in South Africa and £153 in Rhodesia. All other markets have shown a profit. Losses of such magnitude should not recur this year.
A gain has of course been shown by the revaluation of our American stocks in September, 1949, arising from the devalued rate of sterling, which will be reflected in this year's accounts. Turning now to Canada, we find a much brighter picture. Sales of our vehicles there are really booming from coast to coast, and during the year we sent 15,025 vehicles, mainly A40's„ to that country.
An Important and Remunerative Market At the time of preparing this statement I do not know of a single Austin car in stock anywhere in Canada, and I look forward with confidence to expanding our trade in that important and remunerative market.
Here again our stocks of wares and material assets benefited by the devaluation of the £, a reasonable estimate being a net gain of about £425,000 at the present official rate of exchange. It must be borne in mind, however, that such profits may be subject to tax, and also that if ever the relative value of the £ is increased consequent lasses may be incurred. In October last our distributors' in Toronto, Austin Ontario Motors,. opened what must be the finest showrooms and service station in Canada, solely for Austin products. Another leading Austin market is Australia, which also takes a high proportion of trucks. To that country we exported over 18,000 vehicles during the year. I am pleased to be able to report that these are not likely to be the peak figures for these markets, for in the first quarter (August, September and October) of the current year, 4,663 vehicles went to Canada and 10,033 to Australia.
Since I last spoke to you the Indian assembly plant at Madras has been developed to the point where it is ready to turn out finished A40 cars, but we are now waiting to learn the Indian Government's policy on import licences, which up to the mciruent has not been too encouraging.
In South Africa there are two assembly plants tined up, one at Johannesburg, which . has been in operation since October, and the other near Port Elizabeth. about to commence operations.
The South African licensing position, though not finally confirmed, warrants us in expecting a very substantial production from both plants during the current year.
Future of Exports The general picture for this first quarter of 1949-50 is encouraging, as we have
exported over 25,000 vehicles to a value of over £8,000,000.
Nevertheless it will not be easy to fulfil the new programme laid down by the Government since the devaluation of sterling, and it is possible that H.M. Minister; have over-estimated the advantages to be derived in export markets from the devalued E.
As far as we can assess, comparing preand post-devaluation periods, the overall direct effect of the devalued £ on our, overseas sales has been a 15 per cent, increase in value, derived from two countries only outside the U.S.A. and Canada, namely, Belgium, where our sales have doubled, and Switzerland. .
There are very' fewcountries which have not devalued their currency, or have only partially devalued it, where the market is free from quotas, import licences or other restrictions, permitting full enjoyment of the new price advantage.
Indirectly we may in due course begin to benefit from the increase in prices of she products of American or other foreign competitors in sterling areas which have devalued with Britain, and we are hoping that this will help to maintain the devaluation advantage when the "bargain-counter " rush of the first few weeks of devaluation in the few free hard currency markets has subsided, although such compensation will obviously be in sterling sates. For 1948-49 we accounted for 25 per cent. of the exports of the big British manufacturers as a whole, and 30 per cent, of the exports to hard currency markets, and by the latest comparison available, covering August and September of the current year, a period of nine weeks, it is seen that our proportion is'even higher with over 28 per cent. of the total exports of the manufacturers concerned, and over 36 per cent, of the sales to hard currency markets.
You will know only too well that your directors are forced to carry OW their duties and make their decisions against a background of political uncertainty, interference and thinly veiled threats. In spite of this we have spared no effort nor hesitated to take risks and face losses to. earn foreign currency. We are proud of our achievements and will continue to intensify our efforts for the national good, believing as we do that the solution of our current difficulties lies in the hands of private enterprise, and looking forward to the day when nationalised industries will also begin to play their part and make some contribetion to the Exchequer.
Thanks to Suppliers, Agents arid Staffs
Thus we approach the future with as much confidence as is possible in these troublesome times, secure in the knowledge that our products are well received everywhere, that the goodwill of our suppliers and agents has never been higher and our staffs and workpeople never more enthusiastic. I know that you will wish me once more to take this opportunity of offering to all of them our thanks and congratulations, and I do so with all sincerity.
The report and accounts were unanimously adopted and dividends of 20 per cent, on the Preferred Ordinary stock and 40 per cent, on the Ordinary and " A " Ordinary stock were approved.
The retiring director, Mr. J.Gibson Jarvie, was re-elected; and the directors were authorised to fix the remuneration of the auditors, Messrs. Carter and Co.
The conditional deed made between Mr. L. P. Lord and the company was approved.
At a subsequent extraordinary general meeting of the company resolutions were passed approving (1) the amalgamation and conversion of the A" Ordinary stock and the Ordinary stock into one uniform class of Ordinary shares of 5s, each; (2) the capitalisatioa of part of the company's reserves by way of a bonus issue and (3) new articles of association. A further resolution was also passed widening the company's powers relating to the scheme For pensioning employees. At separate general meetings of the Ordinary stockholders and of the "A" Ordinary stockholders held previously, resolution was passed approving the modfication of the-rights of the holders.