HOME RAILWAY SURPRISES
Alpha plus for the L.M.S. and the L.N.E.R.; beta minus for Great Western and delta for Southern is my verdict on the home rail interim figures. As I should have expected, the L.M.S., which has often demonstrated its capacity to keep down expenditure in recent years, has managed to retain, on a comparative basis, most of the big savings effected in the second half of 1938. Even more striking, on this occasion, are the expenditure figures of the L.N.E.R., which show a decrease of £734,000, raising the estimated net revenue rise to £859,000. Against this sort of back- ground the Great Western figures look disappointing and the Southern positively dismal. Great Western's net revenue, it is true, is £383,000 up, which is not bad going, but few were prepared, in the light of Lord Home's speech at the annual meeting in February, for a rise in expendi- ture of £60,000. I recall Lord Home's remark that " economies in working effected in the second half of last year still continue and should make a substantial difference in the company's accounts for 1939." What has happened? Southern's rise of £137,000 in railway working expenditure, although even more discouraging, is perhaps less surprising in view of the importance of coal contracts to this line.
As for the outlook for home-rail stockholders, I think it is reasonably promising. Gross receipts should show a substantial rise over those of the second half of 1938, there should be a useful gain on ancillaries (docks, harbours, &c.), so that although the expenditure comparison is bound to be less favourable than in the first half of the year, it will be surprising if the net revenue gain for the four systems is less than £4,500,00o. Allocating this increase on a rough and ready basis I would give L1,600,000 to L.M.S. ; £1,750,000 to the L.N.E.R. ; £1,000,000 to Great Western and L150,000 to Southern. This would mean that L.M.S. would be able to cover not only its First Preference and Redeemable Preference dividends but also the full 4 per cent. on its 1923 Preference. For L.N.E.R. a net revenue gain of £1,750,000 would mean 31 per cent. on the First Preference; Great Western would earn 21 per cent. on its Ordinary; and Southern would cover the 5 per cent. on its Preferred ordinary with a moderate margin.
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