FINANCE AND INVESTMENT
By CUSTOS
THOSE market observers who have upheld the view that the rise in security priCes has not yet exhausted itself find strong support in the course of events since Sir John Anderson's Budget statement on April 25th. While there has been no great speculative enthusiasm or any runaway rise, neither of which would be desirable or justifiable at this stage, confidence in the post-war prospects of British industry has been sufficiently reinforced to induce many investors with accumulated funds to loosen their purse-strings in spite-of the obvious restraints imposed by coming military events.
Turnover has increased substantially, and where supplies of stock have been short the rise in prices has been correspondingly sharp. The main emphasis has been on equities, which suggests that Budget references to the inflation danger may have attracted fresh support for this -type of " hedge," but I am not convinced that this is the real story. It fails to explain why the buying of equities has remained both cautious and selective- or why there has been no flight from fixed interest stocks. On the contrary, long-dated gilt edged have participated in the improvement and for well-secured prior charges, such as industrial debentures and preferences, demand has remained well in excess of the available supply.
CEMENT GROUP RECOVERY
Investors who have put their faith in the recovery potentialities of the cement industry will be encouraged by the results for 1943 disclosed by the " Blue Circle " group. Although still well below the pre-war level, net profits, after taxation, have improved to the point at which the boards have felt justified in recommending a modest increase in dividends. In the case of Associated Portland Cement Manufacturers trading profit was down from £1,178,434 to £1,124,643, but as investment income rose by about £74,000 and the income-tax charge fell by £18,500, net profit, after tax, was up from £499,382 to £546,741. With a final of 71 per cent. the board in increasing the ordinary dividend from 9 per cent. to to per cent.
British Portland, which is controlled by Associated, is raising its dividend from 15 per cent. to 171 per cent. In this case also- trading profit was slightly lower at £855,715, against £865.,812, but invest- ment income was nearly Lio,000 higher at £86,496. The depreciation charge was practically unchanged at £251,263, but provision for taxation was substantially lower at £215,000, against £266,750. For both Associated and British Portland ordinary stocks market quota- tions have been raised to a level at which the yields offered are tow, but with post-war prospects promising, these securities look worth holding for further recovery.
JOHN LEWIS POSITION
Having recommended in the past both the 5 per cent. Li Ii first preferred and the 71 per cent. second preferred stocks 17)‘ of the John Lewis Partnership I am not surprised that divi- use dend payments are now being resumed. In the case of the first preferred a full year's payment is to be made, bringing matters up to November 30th, 1940. Holders of the second preferred are It to get six months' dividend up to May 31st, 1940. As I have previously pointed out, the Partnership deriiies its income almost btuc] exclusively from its holding of the ordinary capital of John Lewis T and Co., the operating concern. This company has now returned to the dividend list, having cleared off its preference arrears with 3 payment of 4 per cent. on the ordinary capital for the year to January 31st, 1944.
Trading results have not yet been disclosed, but to judge from the dividend decision they should prove distinctly satisfactory. Although the indications for the current year are that profits are unlikely to reach those of 1943, a modest dividend on the ordinary should now be well assured. On that basis the Partnership should be able to clear off its preferred dividend arrears at a fairly rapid pace. Quoted at 2os. and 21S. 3d. respectively, the 5 per cent. preferred and the 7} per cent. preferred are still good lock-up holdings.
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