COMPANY MEETING

DUNLOP RUBBER COMPANY

THE forty-first ordinary general meeting of the Dunlop Rubber Company, Limited, was held on Wednesday, April 24th, at the Edward VII Rooms, Northumterland Avenue, London, W.C.

Sir J. George Beharrell, D.S.O., the chairman of the company, in the course of his speech, said: I take it that you will all have lead with pleasure the satisfactoi y results disclosed by the directors' report and accounts for 1939. These did not come altogether as a surprise to your Board. They are the outcome of many years of spade-work and careful preparation and planning.

You will remember that when I addressed you last year, I said that the underlying economic conditions were healthier than they had been at the beginning of 1938, and that the improvement in trade which had marked the last half of that year, was con- tinuing at the time at which I was speaking.

. Thatimprovement continued, in spite of the threatening international position, right up to the outbreak of war. More- over, it was not confined to our own country, but applied prac- tically to the whole of our world business. There seemed to be a real increase of demand, and, if only a peaceful solution to international problems could have been found, there is every probability that the world might have enjoyed a considerable period of genuine prosperity.

Your Company found itself in an excellent position to benefit by these improved conditions.

You know how for many years your Board has been working to improve the structure and efficiency of the world-wide Dunlop Organisation.

BASIS BROADENED

Its basis had been broadened in two ways, first by a wider range of products and second by a greater spread of manufacturing units in well-chosen territories. As you will remember, we had acquired various businesses, now included in our Rubber Products Division, and these have been reorganised and their profit-earning capacity increased by concentration on the most profitable lines. Years ago, companies had been allowed to acquire the Dunlop goodwill overseas. These have been purchased, reorganised and welded unto the Dunlop Family. Other overseas Dunlop Com- panies had fought their way successfully through the difficulties of the years succeeding the last war, when they were trying to build up a business in highly industrialised territories.

Important new factories had been established in British over- seas territories, in order to conserve and develop our trade there. The Group had been relieved of financial burdens, and the balance- sheet position gradually strengthened ; purchasing, research, manu- facturing and sales policies had been carefully studied and improved, and a first-rate personnel built up by careful selection. By these means the Dunlop name had been made one of the most important and respected in the commercial world.

In these circumstances it w is only reasonable to expect that, with favourable trade conditions, your Company would enjoy a good year in 1939, but events have gone beyond this and, had it not been for the war, I think I should have been able to present results even better than those now before you. In fact, everything seemed to go the right way for us The demand for our products was good with very few exceptions, both at home and abroad, and prices remunerative ; the rising price of rubber, which averaged 9d. over the whole year, as against just under 7.;d. in 1938, benefited the Plantations Companies, and in its purchases of our main raw materials, especially rubber and cotton, your Board's policy has proved a wise one.

I want to make it quite clear that this result was mainly obtained through cur normal trade activities, only 71 per cent. of the total turnover of the Dunlop Group of Companies for the year being due to direct Government orders. If we take the turn- over of Home Companies alone, this business only represented 14 per cent, of the turnover. The proportion of Government busi- ness increased after the outbreak of war and today is, of course, considerably higher. We have responded promptly to all demands made upon us, demands which have involved the Company in considerable capital outlay. It is a source of great encouragement to- us for the future to realise how little our success in 1939 was dependent on direct Government orders, and how much was due to export and foreign business.

THE Accoumrs

The net profit for the year amounted to £2,853,000 compared with £t,5oi,000 in 1938. A reference to the comparative results for the years 1934-39 shows at a glance how the level of profits in 1939 is far in excess of those of the preceding five years. While paying due regard to the uncertainty and difficulties which are ahead of all large undertakings, the Board decided, after providin; for the preference dividends, to recommend a dividend of 8 po: cent, on the ordinary stock and a bonus of 4 per cent., and th dividend and bonus, if approved, will be paid on May 8th. I the accounts, income-tax has been deducted from this divider and bonus at the rate of 7s. 6d. in the £.

After providing for this increased distribution, the directo.... have been able to increase still further the financial strength the company, and I am sure this decision will be wholeheartedi e approved. Out of the available profits of £3,456,000 there Li, been provided for taxation the sum of £1,o27,000.

TYRE DIVISION

Dealing now with the business of the tyre division, the mechanisation of our land forces entails the use of both pneumati,: and solid tyres, many of which are of specialised construction. The importance of the tyre as a factor of mobility needs r,..) emphasis nor need I do more than refer to its importance in aerial warfare.

For some time prior to the war our technical and research de- partments were engaged upon the development and production of tyre equipment designed to meet the special requirements of the Services. Very considerable success had been achieved, and, in September last, these preparations were of great value.

As you will realise, the outbreak of war was accornpanied by a huge increase in the demands of the Services. The most intense effort was made to meet these demands, and for a period of three months the quantity of certain types of Dunlop tyres available to civilian transport was inadequate. First consideration was, of course, given to national needs, even although an amount of normal business was thereby jeopardised. Through the strenuous efforts of management and operatives alike, this position is now in course of recovery, and I know that the assistance which your company has been able to give to the Government departments concerned, is highly regarded.

SALES OF COVERS The sales of motor covers for the first eight months of 1939 promised a record year. This situation was entirely changed by the severe restrictions on private motoring necessitated by the out- break of war. At the end of the year it was estimated that one million cars had been laid up by their owners, and the car manu- facturing business, which had shown a splendid recovery in the first part of the year, suffered a serious reverse. Replacement sales of motor car tyres for the complete year were below those of 1938, and sales for original equipment had to fall into line with the reduced volume of car production. The position of com- mercial vehicle tyres was better, as commercial transport was not interfered with to the same extent by war conditions. As a result, our total sales of commercial vehicle tyres for the year constituted a record.

We also had record sales of aero covers, due, of course, to the armament programme, and the replacement business in cycle tyres was the highest we have ever known. We have thought many times that we were approaching the limit in cycle tyre sales, but, during the latter part of last year, the restriction of motoring through petrol rationing undoubtedly gave a stimulus to the use of the bicycle as a means of transport. With the assistance of these compensating factors, the net profits of the tyre division showed a substantial increase over those of 1938, in spite of the setback in regard to motor covers, normally our most important line of business.

OVERSEAS COMPANIES

This Group shows the greatest improvement. Its profits are nearly 9 times greater than in the previous year, and account for over half the increase in the total profits of the company. The business of the French Dunlop Company followed very much the same course as that of our own Tyre Division. Total sales showed a substantial advance on the previous year, and there was an increase in profits.

When I spoke to you last year I said that subject to the con- tinuance of the improved general trading conditions in America. the outlook of the American Dunlop Company for 1939 was more promising than it had been for many years. I am glad to be able to tell you that the improvement was maintained and my hopeful forecast has been amply justified. The improved position of the Dunlop Tire and Rubber Goods Company in the Canadian market has been well maintained. In spite of difficulties caused by war conditions, the Japanese Dunlop Company's sales and profits showed an improvement over 1938 and a satisfactory divi- dend in respect of the 1938 profits was remitted to this country. The Irish Dunlop Company again had a good year, with an improvement in net turnover.

There was a noteworthy expansion in the business of the two latest additions to the company's factories overseas—those in India and South Africa—and substantial profits accrued to the parent Company. The managements of these factories are working in close co-operation with their respective Governments and are thus able to make a useful contribution to the common war effort. In export sales the company had a remarkable year, both as regards volume and turnover. In spite of the increasing restriction of markets through currency difficulties, largely increased profits were made. This is a matter of the greatest national importance at the present time, and we hope still further to improve the position in 1940.

The report and accounts were unanimously adopted.