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MONEY MATTERS by Martin Younger
Page 120
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Well done Seddon !
TEMMING from a 17f per cent increased turnover, the pre-tax profits of Seddon Diesel Vehicles for the first half of the current year jumped to £215,350 from £171,400 in respect of the same period the previous year. There is full capacity working at the factories, a situation which has undoubtedly widened profit margins. The directors state that the full order-book position should enable turnover to be maintained during the remainder of the current trading year, ending June 30.
Assuming that margins at least hold their ground, a total pre-tax profit of around £440,000 for the year seems likely. The previous year's total was £351,000. This would give earnings of around 35 per cent. The Government having promised "restraint" instead of "freeze" so far as distributions are concerned, the market is distinctly hopeful of a restrained lift in the dividend. Though the effects of competition cannot be ignored there is no doubt that Seddon's long-term prospects are indeed bright. Up 7+d. at 5s. immediately following the latest announcement these 2s. Ordinary shares yield 3i per cent based on the latest dividend. Meagre though this return may be, I regard them as a share to hold.
There was encouraging news too for Wiles Group shareholders. Chairman Mr. J. E. Hanson is confident that profits for the current year will "certainly achieve not less than the earlier forecast of £550,000". Sales by Tillotson Commercial Motors have been well maintained, he adds, and there has been a "marked increase" in sales in the bodybuilding and spares and service divisions. Of the revolution in containers, Mr. Hanson reports "we have now started quantity-line production of these".
Meantime the interim dividend is being held at 6 per cent. The board forecasts a 15 per cent total for the year. This rate would have been paid last year but for the freeze; it would represent an increase of 2,+ per cent. Though this increase may not be sufficiently "restrained" for the Government, certainly on the basis of cover/ retentions, Wiles can make out a good case for the increase.