23 JUNE 1939, Page 36


Like Associated Electrical Industries, the General Electric Company has achieved a new high record of trading profit in 1938, but returns a rather lower figure of net profit. For the year ended March 31st, 1939, trading profits of General Electric have risen from £1,772,181 to £1,776,099, a satis- factory outcome of what must have been a difficult year. It seems that the inflow of orders, while somewhat below the peak level of the previous year, was substantial, and in spite of political uncertainties and currency handicaps, the volume of oversea trade actually established a new record. There are black marks, however, for China, where condi- tions continued to be adverse, and New Zealand, where im- port restrictions are now seriously endangering the business built up there in recent years. It is also intimated that high production costs due to wage increases are making business more difficult in both home and oversea markets.

In the accounts themselves, the reduction in net profit from £1,345,244 to £1,328,750 is shown CO be due to a larger allowance for depreciation, at £380,492, against £368,642, and to an increase of £8,000 in the contribution to pension fund. Once again the net figure amply covers the 20 per cent. ordinary distribution, even after £430,000, against £400,000, has been transferred 'to taxation reserve, and another f xoo,000 to general reserve. I like the balance- sheet of this front-rank British undertaking, with its surplus liquid assets of £3,600,000, general reserve of £4,600,000, which more than covers the whole of the ordinary capital, and goodwill and patents carried at Li. Following the accounts, the f,i ordinary units have improved to 75s. 6d., at which the yield is about £5 7s. per cent. The units are a fine long-term holding, but I consider them over-valued in relation to English Electric and Electric Construction, both of which offer much more generous returns.