COMPANY MEETING

ASSOCIATED PORTLAND CEMENT MANUFACTURERS

RECORD PRODUCTION SIR P. MALCOLM STEWART'S REVIEW

THE annual general meeting of the Associated Portland Cement Manufacturers, Ltd., was held on March 30th, at 21 Tothill Street, London, S.W.

Sir P. Malcolm Stewart, Bt., the chairman, in the course of his speech, said : The profit on trading at £1,054,591 compares with £1,149,494, a reduction of £94,903. This is accounted for mainly by a lower margin of profit due to the increaseed cost of manu- facture. Interest and dividends on investments at £539,361, show a small increase of £2,693. The total revenue for the year at £1,594,828 is down by £92,522 and the balance of profit—after the provision of £417,150 for depreciation, £67,917 for debenture stock sinking funds and other charges—at £934,228 compares with £929,617.

On the debit side of the profit and loss account the only difference in the charges is that this year we have not set aside anything for contingencies reserve or for depreciation of investments in subsidiary companies. The balance of profit, £934,228, compares with £929,617.

As to why our Allied Company, the British Portland Cement Manufacturers Limited, trading under generally similar circum- stances, fully maintained its trading profits, that is partly due to the fact that owing to the more widespread disposition of its works it receives a somewhat higher average selling price in the home trade and, further, its proportion of the export trade is much smaller than that of the Associated Portland Cement Manufacturers Limited.

Out of this sum there has already been paid the half-year's prefer- ence dividend of £68,750 and an interim dividend at 71 per cent. on the ordinary stock of £262,500, leaving a balance of £602,978. This permits the recommendation of the payment of the final dividend on the preference stock and of a final dividend of 15 per cent. on the ordinary stock, making 221 per cent. for the year. There will remain a balance of £9,228 to be added to the carry- forward which will then stand at £205,893.

TRADING CONDITIONS.

Trading conditions during the early part of last year were somewhat adversely affected by unfavourable climatic conditions. However, when these changed, an improved demand was experienced and at the close of the year we had made record deliveries of Blue Circle Portland Cement. The influence of increased turnover though helpful was insufficient to maintain the trading profits at last year's figure in the face of the increased cost of manufacture. It is insuffi- ciently realised that there had been no alteration in the selling prices of Portland Cement, which had remained unchanged since 1935, until the middle of December last when prices were advanced by 3s. per ton. This advance had no practical effect on the year's trading. Our consistent policy of endeavour to thwart the tendency of rising prices, which are bound to curtail construction and building activity, is again demonstrated by our holding down prices during the year despite the rising cost of production.

It is interesting to note that the wages paid by us have been advanced by some 180 per cent. since March, 1914, and this increase does not take account of the cost of decreasing working hours from 561 to 48 per week. The price of coal is some too per cent. higher and iron and steel 66 per cent. to 116 per cent. higher according to the class of material ; yet the net price realised by us today for Portland cement in the home trade is only 4.5 per cent. higher than in March, 1914.

This is a bald statement, but there is much behind it. It reflects clearly, and I trust you will agree satisfactorily, the results obtained from the definite policy outlined to the shareholders in 1925 and since consistently carried out to the advantage of stockholders and all who serve the company, whatever their responsibilities or duties. In addition consumers have benefited by the maintenance of low prices, which have in turn favoured the further uses of cement and thus increased turnover of the products we manufacture. The progress achieved is due primarily to a simple came not cloaked in mystery. We have steadily increased the efficiency of our pro- duction ; the beneficial results have grown cumulatively as progress has been effected. One by one the works have been tackled, pre- cedence always being given to that works endowed with the best economic advantages. Each in turn has been brought up to the maximum desirable output with a resultant marked increased efficiency. Meanwhile these results have been obtained despite keen competition, a general pervading over-production and without any special favours from Government which have not been sought. How the fruits of efficiency have been distributed I have already explained.

PRICE OF COAL.

By far the most serious influence on costs is the steep increase in the price of coal which will be felt to a much greater extent in the current year. For every two tons of cement manufactured approximately one ton of coal is required. It was difficult under the control as recently exercised to obtain adequate supplies of the qualities of coal which long experience has shown are best suited to our requirements. This difficulty has now been largely eliminated, for which we are grateful to the Mines Department for the con- siderable fulfilment of the assurances given by the Secretary for Mines in the House of Commons with reference to this matter. It was not to be expected that the very low prices ruling for many years would continue indefinitely, indeed, we are not so selfish as to wish for a range of uneconomic prices resulting in miners being underpaid for their hard and dangerous work in winning coal. There is no class of worker better entitled to a really good return for its labour.

Further, we do not wish the shareholders in collieries to be deprived of a fair return on their capital, provided always the financial structure of the companies in which they are interested, and the valuation of their assets are sound. I believe it would be found that there is a wide gap between the prices in force today and such fair prices as could be fixed if the regulations affecting the coal industry were framed on the essential principle that conditions favouring the obtaining of maximum quantities from the mines most economically situated and with the highest efficient production prevailed.

There is no justification whatsoever for the present exorbitant prices ruling for coal in this country. Apart from ill-advised legis- lation the recent policy of the trade has been poor.

We must not be disillusioned or misled into thinking that all is well with the coal industry because profits at the moment are much increased by the effect of Government compulsion and by the present improved demand. The position of the coal industry is too artificial and this will become obvious when the inevitable falling off in trade occurs and it is found that the bolstering up of inefficiency has brought its own Nemesis.

PURCHASE OF ALPHA SHARES.

The outstanding event of the year was the completion of negotia- tions whereby on January 26th last an offer was made by us to acquirz the t,too,000 issued £i ordinary shares of Alpha Cement Limited through an exchange on the basis of nine Associated Portland Cement Manufacturers Limited ordinary shares for every twenty Alpha ordinary shares. This offer has already been accepted by the holders of over 99 per cent. of the Alpha ordinary shares and the appropriate number of Associated Portland Cement Manufacturers ordinary shares are in course of being transferred.

An important feature of this acquisition is that it is jointly entered into by ourselves and the Tunnel Portland Cement Company Limited, who take up 26 per cent. of the Alpha ordinary shares and issue to us in consideration therefor 231,660 Tunnel Company non-voting " B " ordinary shares of los. each fully paid. However, the transaction rests on a much broader basis than that of a joint ownership of the equity in the Alpha company. The Tunnel, the Alpha and our companies are entering into a working agreement for a term of years which provides for the co-ordination and for the closest co-operation of sales policies.

The purchase was completed on March 24th and Sir Arthur Marshall and Mr. Gowen are being elected directors of this company and the British Portland Cement Manufacturers Limited ; Mr. Gowen will shortly be appointed an ex officio member of the Managing Directors' Committee of both companies.

I will now make a few remarks on the general prosperity we at., enjoying. It is natural that much interest should be evinced as to whether we are on the crest of the wave, have not reached it or have passed it. Perhaps the present position can be best realised if we imagine two waves influencing our prosperity. Let us assume on wave represents the volume of normal activity not at all or but fifth- affected by the Defence Programme. This wave I believe has passed its crest. The other wave representing the volume of activity mor • directly due to the Defence Programme has hardly reached its cres' Because these waves are interlocked it is difficult to measure precise1' the volume of each, but the contraction in volume of the first vim,: is more or less compensated for by the expansion in volume of th.. second wave. It needs considerable optimism to assume that when the volume of the wave directly affected by the Defence Programn,2 in turn contracts we shall be so fortunate at that period as to exist!! - ence an increase in volume of trade not so affected.

CURRENT YEAR'S PROSPECTS.

With regard to the prospects for the current year, I am definite., hopeful. We have so far experienced a further improved demapd resulting in a satisfactory increase of deliveries of Blue Circle Portland Cement to date as compared with those made during the correspondin_.; period of last year. This has no doubt been partially helped by t' exceptionally favourable weather conditions.

The outstanding influence on my forecast is the bright prose- of an increased demand for our products owing to the continu growth of public and other large-scale constructional work. Th.: are the sources which create demand for large quantities of Portia: cement, and I am assuming they will not be contracted by Governor action.

For the reasons stated, I look forward confidently to submit - to you satisfactory accounts when, all being well, we meet next year.

The report and accounts were unanimously adopted and 2 proceedings terminated with a vote of thanks to the chain, directors and staff.