FINANCE AND INVESTMENT
By CUSTOS SommmE news from the war fronts and the persistent pressure of funds seeking investment have been just about equally matched n stock market factors - this week. Here and there profit-snatching sales by the professional and semi-professional element have brought a modest relapse in prices, but taken as a whole the investment front remains immensely strong. Would-be buyers of depressed shares with recovery possibilities vastly outnumber the sellers, and seem likely to do so for a long time. It also looks as if in the search for income yields investors will be willing to buy such securities as home rail junior stocks and many second-grade indus- trial ordinary shares up to substantially higher levels.
COURTAULDS' PROSPECTS
Stockholders in Courtaulds can never complain of any lack of clarity in the annual review presented by their chairman. This
year Mr. Samuel Courtauld has had a good deal to say on the
subject of the Treasury award in the matter of the American Viscose sale. The cash proceeds amounting to L27,125,000, have already been invested in British Government securities, and are not to form the basis of any capital distribution scheme. Most stockholders, I imagine, will accept the board's view that at present the reasons for husbanding resources are "overwhelmingly strong." As for the effects on income, the E.P.T. position is obviously relevant. Mr. Courtauld points out that the favourable profit standard of the American Viscose will no longer form part of the standard of the group. On the other hand, it appears that the net income from the new gilt-edged investments, not being subject to E.P.T. or N.D.C. may not differ materially from the net income which would probably have been received from America during periods of high taxation there had the original American investment remained undisturbed This year has started well, the company having been busy in the first six months in spite of the large and growing number of trade restrictions. When the cautious head of this business forecasts that the net distributable income for 1942 will not be far different from that of 1941, stockholders may rest assured that, in the absence of anything less than unforeseeable calamities, the prospects are well assured. At 38s. 3d., Courtaulds Li ordinary units yield roughly 4 per cent, on the 71 per cent, dividend rate.
MORRIS MOTORS' PROFITS
Another of our leading industrial concerns which has now adjusted itself satisfactorily to war conditions and has a promising peace- time outlook is Morris Motors. Gross trading profits rose last yen from £1,951,164 to £2,224,087, net profit, after depreciation, was up from £1,520,913 to L1,634,520 and taxation called for only L608,380 against £774,282. On the other hand, A.R.P. for the group dlled for £214,312, against £122,537, special provision for rehabilitating factories for post-war production has been doubled at kroo,000, and there is a transfer of £25,000, against nil, l0 dividend equalisation reserve. Although the ordinary dividend Is merely maintained at 17f per cent., free of tax, it has again been earned with a comfortable margin. In his survey, Lord Nuffield makes it clear that last year's improvement in net trading profit was not due to better profit margins, but was the outcome of 3 "somewhat lower" profit margin on a greatly expanded volume of business. From the consolidated balance-sheet it is apparent that this group's liquid position is very strong, cash and investments amounting to £3,65o,000. Nor does it seem that a fall in the stock- in-trade item from L4,003,769 to £2,885,653 indicates any curtailment in the scale of operations. Factory capacity has, in fact, been con- siderably enlarged. At 345. 6d. the 5s. units yield just over 5 Per cent. gross. They are a good holding.
The fact that goods made of raw materials in short supply owing to war conditions are advertised in this journal should not be taken as an indication that they are necessarily available for export.
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