ENANCE AND INVESTMENT
By CUSTOS
AFTER such a breath-taking rise there should be no surprise that stock markets have now paused. Technical influences alone would have called a halt sooner or later, and the news from the Russian front has merely precipitated profit-taking by the short-term speculators. Some groups, such as 'Kars, were obviously vulnerable, and there the setback in prices has been fairly sharp, but taking markets as a whole I doubt whether the reaction will go very far unless the news from the war fronts takes a really grim turn. So long as investors remain confident of victory within a reasonable length of time (say, one year to two years), buying in a market bare of stock must tend to push prices up. There are still plenty of shares with recovery prospects for those who are prepared to ignore fluctuations, pay for their stock, and wait.
LEVER BROS. DIVIDEND CUT
It is bad news for ordinary stockholders in Lever Bros. and Unilever, Ltd., that record profits for 1940 are accompanied br a cut in dividend from 10 to 5 per cent. Net profit, before appropriations but after taxation, rose last year from £6,742,053 to £6,987,130, which would have covered a to per cent. dividend with a margin tc spare, but unfortunately the English end o: the Unilever combine has a dividend equalisation arrangement with the Dutch concern. Since the enemy occupation of Holland no news has been available about the financial position of the Dutch Unilever company. Against this background the English company's decision to restrict its dividend to 5 per cent. must be regarded as a precautionary measure.
DEBENHAMS' GOOD EARNINGS
Although for the first time since the capital reorganisatio:: scheme in 1933 Debenhams are not paying any dividend on the ordinary shares, actual earnings for the year to July 31st are surprisingly good. Net profits of £485,735 go against L533,316, and dividends amounting to £379,000 have been paid on all three classes of preference shares. Transfers to taxation reserve and reserve fund are maintained at £50,000 and £258,557 is carried forward. Debenhams 6f per cent. LI First Preferences stand at as. 6d., the 6} per cent. Er Second Preferences It 14s. 3d. and the 7 per cent. Jos. Third Preferences at 6s. 6d. They are all good value for money, offering good yields and a chance of a rise in capital value.
FURNESS, WITHY PROFITS
Like most shipping companies, Furness, Withy has succeeded an increasing its profits sufficiently to justify a modest rise in dividend. For the year To April 30th net profits, after tax but before providing for depreciation, were £46,00o higher at £665,072. Depreciation called for £350,000, fleet replacement account has received a transfer of Litoc,000, and after raising the ordinary dividend from 5 to 6 per cent. the board carry forward Li86,214, against £189,579 brought in. At first sight these result suggest that the terms of the Government's requisitioning scheme are generous, but Lord Essendon explained at the meeting that steamship profits were actually down. The increase in earnings was due entirely to better ,revenue from other sections of the business. In the light of the company's war and post-war prospects, Furness, Withy LI ordinaries seem to me to be WY valued at the current. price of 22E. 6d. On the 6 per cent dividend the yield is about 5+ per cent.
EASTWOODS RECOVERY
Building trade concerns are already showing a recovery, which goes some way towards justifying the recent rise in the shale market. Eastwoods, the brick-makers and builders' merchants,
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FINANCE AND INVESTMENT
(Continued from page 292) have made a net profit for the year to March 31st of £43,300, against £32,400, despite the provision of a larger sum for bad and doubtful debts and £4,100 for war damage insurance and claims. It has thus been possible to raise the ordinary dividend from 5 to 8 per cent. and to add L3,800 to the carry forward. In the balance-sheet larger turnover is reflected in increases in the creditors and debtors items, but stocks are substantially lower at £73,600, against L123,700. As usual, this company shows a strong liquid position, the combined holding of cash and gilt. edged having risen during the year. At 37s. ex dividend the £1 ordinary shares yield 41 per cent. They are not dear as a lock-up investment.
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