THE CEMENT PRICE RISE
The decision of the cement industry to raise its selling prices by 3s. per ton underlines the favourable position in which cement makers are now placed. Most of the increase is accounted for, of course, by the higher cost of coal and other items, but it is thought that the more efficient low-cost companies may be able to retain net about is. per ton. On the estimated annual output of 5,000,000 tons for the Associated Portland group, this would imply an addition to revenue of some £25o,000, Will higher selling prices check demand ? I do not think so, at least not in existing conditions. Quite apart from the requirements of the defence programme, such as factories and aerodromes, there are road, railway and harbour improvement plans, slum-clearance and other fields of constructional activity demanding cement whose exploitation should continue on an intensive scale for many years.
Until comparatively recent times, price-cutting in the trade robbed even the best cement shares of real investment status but this handicap no longer exists. Co-operation within the industry is steadily developing, admittedly with the winds of trade blowing in its favour, with the result that selling prices rest on a firm basis. The share I like best is Associated Portland Ex ordinary, which have come down this year from a high level of nos. to 9os. The Associated group is as efficient as any in the trade, its plant is up-to-date and its assets are conservatively valued in the balance-sheet. At 9os. the shares yield 5 per cent. on the last dividend of 22i per cent., which does not look unreasonable in the light of the Company's financial strength and trading prospects. The shares should be worth watching for a buying opportunity on a dull day.
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